MENU

Published on 21/09/2020 12:58:48 PM | Source: Nirmal Bang Ltd

IPO Note - Computer Age Management Services Ltd By Nirmal Bang

Posted in IPO Reports| #Nirmal Bang Ltd #IPO

Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel  https://t.me/InvestmentGuruIndia 

Download Telegram App before Joining the Channel

BACKGROUND

CAMS (Computer Age Management Services Ltd) is a technology-driven financial infrastructure and service provider. The company was incorporated in the year of 1988. Great Terrain Investment (affiliate of Warburg Pincus) is the promoter of the company with a 43.5% stake. It is India's largest RTA (registrar and transfer agent) of mutual funds. CAMS commands 70% market share of MF industry’s total AAUM. The AAUM of mutual funds serviced by CAMS grew from Rs. 7.3 Trn as of March, 2015 to Rs. 17.1 Trn as of March, 2020, at a CAGR of 19%.

 

Details and Objects of the Issue

The offer is for sale up to 1.82 Cr equity shares aggregating up to Rs. 2242 Cr by NSE Investments. The Offer shall constitute 37.4% of the post-offer paid-up equity share capital of the company.

 

Investment Rationale

* Strong industry tailwind: MF RTA industry is expected to grow at 15% CAGR over FY20-25E.

* Industry shift towards Equity MFs augurs well for CAMS as they offer 3x the fees offered by Debt & Liquid funds.

* Consolidation within the MF industry amongst the top 5 AMCs should continue to aid market share gains for CAMS.

* High Entry Barriers has resulted in the MF RTA industry being an ‘Oligopoly’ with just 3 players (practically 2 players).

* Track record of robust financial performance

 

Valuation and Recommendation

Over the past 5 years, CAMS has further strengthened its market share from 61% in March 2015 to 70% in July 2020, based on AAUM serviced. With the MF RTA industry estimated grow at a CAGR of 15% over FY20-25E, we believe CAMS can also deliver similar growth going forward. CAMS provides investors a better investment option over AMCs as (i) CAMS operates in a two player duopoly market where despite being the larger player(70% market share), it is further gaining market share consistently and (ii) being exposed to 9 of the top 15 MFs and 4 of the top 5 MFs substantially reduces the risk of market share loss by any single MF which will always be the threat in case of a standalone MF company. We recommend “SUBSCRIBE” to the issue from a long term perspective.

 

To Read Complete Report & Disclaimer Click Here

 

Please refer disclaimer at https://investmentguruindia.com/Disclaimer/nirmal.html

SEBI Registration number is INH000001766

 

Above views are of the author and not of the website kindly read disclaimer