Published on 19/09/2020 11:14:25 AM | Source: Geojit Financial Services Ltd

IPO Note - Computer Age Management Services Ltd By Geojit Financial

Posted in IPO Reports| #IPO #Geojit Financial Services Ltd

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The leader with an asset-light business model…

Computer Age Management Services Ltd (CAMS), incorporated in 1988, is a technology-driven financial infrastructure and services provider to mutual funds and other financial institutions, headquartered in Chennai. CAMS is India’s largest registrar and transfer agent of mutual funds with an aggregate market share of about 70%, based on mutual fund average assets under management (AAUM) managed by its clients. Great Terrain is the Promoter of the Company. Four of the five largest mutual funds, as well as nine of the fifteen largest mutual funds based on AAUM, are their clients. CAMS provide services through a pan-India physical network comprising 271 service centers spread over 25 states and five union territories. Marquee shareholders include Great Terrain (an affiliate of Warburg Pincus), HDFC, HDFC Bank and NSEIL.

* In FY20, CAMS generated 87% of the revenue from the Mutual Fund services business.

* The 5 year CAGR of AUM of equity mutual funds serviced by CAMS is 19.1%.

* As of July 2020, CAMS serviced Rs.19.2 trillion of AAUM of 16 mutual fund clients.

* Company’s market share grew from approximately 61% in March 2015 to approximately 70% in March 2020, based on AAUM serviced.

* Clients include HDFC AMC Limited, ICICI Prudential AMC Limited, SBI Funds Management Private Limited and Aditya Birla Capital Limited.

* CAMS also offers services to electronic payment collections, insurance, alternative investment funds, KYC registration, software solutions and banking & non-banking services business.

* CAMS subsidiary CFISPL received certificate of registration for undertaking business as an NBFC-Account Aggregator in February 2020.

* It has a 39% market share as an insurance repository.

* For FY18-20, revenue grew at a CAGR of 4% while the PAT grew at 9% CAGR. In Q1FY21, CAMS reported a profit of Rs.40.8cr on revenue of Rs.148.6cr.

* At the upper price band of Rs.1,230, CAMS is available at a P/E of 34.6x and when we annualize Q1FY21 numbers we arrive at a P/E of 36.7x for FY21E on a post issue basis. Given that there is no listed peer to compare, and based on stable financial, we assign a subscribe rating on this IPO.


Purpose of IPO

The objective of the Offer is to carry out the Offer for Sale of up to 18,246,600 Equity Shares by the NSE due to SEBI ruling and to achieve the benefits of listing the Equity Shares on the BSE.


Key Risks

* Uncertainty and future impact due to Covid 19.

* Decline in AAUM of its clients.

* Uncertainty of revenue from account aggregation business.


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