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Revenue yield inches up, margin guidance tepid

Result Highlights

Asset-based Mutual Fund Revenue: Asset-based mutual fund revenue was up 1.0% QoQ and 18.9% YoY to Rs1.81bn, broadly in line with AAUM serviced by CAMS, which was flat QoQ but up 19.6% YoY.

Non-Asset-based Mutual Fund Revenue: Non-asset-based mutual fund revenue rose 1.1% QoQ and 29.6% YoY to Rs 0.36bn, driven by transactions

Non-Mutual Fund Revenue: Non-mutual fund revenue rose 14.8% QoQ and 32.2% YoY, with AIF/PMS, Payments and Insurance repository businesses contributing

Operating profit margin: Reported Operating EBITDA amounted to Rs 1,060mn for the quarter, translating to an EBITDA margin of 43.6%, down -160 bps QoQ

Our view – Revenue yield inches up, margin guidance tepid

There has been an improved in revnue yield on sequential basis driven by the improvement in share of equity in AUM: Calculated revenue yield for the quarter was 3.64 bps, up 0.08 bps QoQ. Share of Equity in has AUM moved up from 40.7% to 41.4% on sequential basis. There were also some inter-customer movements impacting

Management continues to sound very cautious with their EBITDA margin guidance: Management stated that, in a 'good year', the EBITDA margin is expected to be a little above 40%, although the actual EBITDA margin for the quarter was much higher at 43.6%, for the quarter

Key Non-MF initiatives went live during the quarter: CAMS Finserv went live during the quarter and eNPS, the direct-to-consumer product, went live in March. The contribution to non-mutual fund revenue from account aggregator and NPS business is currently negligible.

We maintain ‘Buy’ rating on CAMS with a revised price target of Rs 3161: We value CAMS at 47x FY23 P/E for an FY21-24E EPS CAGR of 23%.

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