CAMS: Begin with ‘add’ and DCF-based FV of Rs 1,850

We provoke protection with an ‘add’ ranking and DCF-based truthful worth of Rs 1,850 (5% upside).

Key choose amongst MF performs: CAMS’ prospects are instantly linked to these of India’s MF business, with a market share of ~70% in MF AAUM. As a dominant operator in a duopoly RTA market, its breadth affords safety towards market share volatility. We do word that its income focus amongst high AMCs limits its pricing energy and compresses yields. We anticipate its enhancing productiveness and unit economies to mitigate slower MF AUM development to drive 14% EPS CAGR over FY2021-24E. We provoke protection with an ‘add’ ranking and DCF-based truthful worth of Rs 1,850 (5% upside).

CAMS has a dominant place in India’s registrar and switch agent (RTA) market duopoly, which reduces dangers of market share actions. This makes it the most effective MF performs and gives visibility for its earnings. We proceed to be cautious about medium-term challenges to India’s mutual fund business, which is able to possible stress CAMS’ revenues, driving (reasonable) 14% EPS CAGR throughout FY2021-24E.

CAMS’ mannequin is intrinsically instantly linked to Indian MF AAUMs, serving about 70% of Indian MF AUMs—this makes it broadly agnostic to market share actions amongst AMCs. Its MF revenues (87% of whole in FY2020), though largely linked to served AUMs, have lagged asset development resulting from persistent yield compression. This can be a results of the excessive income focus from high purchasers (~36% from top-2 AMCs and ~67% from top-5), which limits its pricing energy vis-a-vis AMCs.

Together with its subsidiaries, CAMS gives a number of value-added providers to mutual funds, insurance coverage firms and AIFs in addition to associated stakeholders like distributors and traders. Its enterprise proposition is underscored by broad distribution, numerous product bouquet, area experience and proprietary software program and know-how platforms.

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