ADD Computer Age Management Services Ltd. For Target Rs.3500 - Yes Securities
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Positives seems somewhat priced in
Our view – Yield niggles continue to emerge unexpectedly
This particular quarter saw a less than normal rise in revenue from mutual fund business for a given rise in AUM despite rise in share of equity in AUM: The rise in revenue was about 60% plus for a given rise in AUM compared with 70% generally expected. This was mainly due to rise in scale customers, which marginally add lesser yield. However, there is no change in assumptions and going forward, normal telescopic formula would be expected to be applied. Non-asset based mutual fund revenue outpaced asset-based mutual fund revenue and non-mutual fund revenue outpaced both: The non-asset based revenue growth has been higher this quarter and management does not see any great moderation coming. The share of non-mutual fund business to increase by around 2% every year. KRA has been the biggest engine for non-mutual fund revenue growth, followed by CAMSPay and then AIF business. We maintain ADD rating on CAMS with an unchanged price target of Rs 3500: We value CAMS at 35x FY26 P/E at which CAMS would trade at 14.0x FY26 P/B.
Result Highlights (See “Our View” above for elaboration and insight)
* Asset-based Mutual Fund Revenue: Asset-based mutual fund revenue was up 5.9%/19.9% QoQ/YoY to Rs 2.24bn, lagging the growth in AAUM serviced by CAMS, which was up 9.6% QoQ and 32.9% YoY.
* Non-Asset-based Mutual Fund Revenue: Non-asset-based mutual fund revenue rose 8.7%/27.3% QoQ/YoY, driven by transaction revenue, call center revenue and miscellaneous income.
* Non-Mutual Fund Revenue: Non-mutual fund revenue rose 13.0%/52.9% QoQ/YoY, driven YoY by Think360 and growth in Alternatives, KRA and CAMSPay revenue.
* Operating profit margin: Calculated Operating EBITDA amounted to Rs 1,433mn for the quarter, translating to an EBITDA margin of 46.2%, up 151bps QoQ.
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