Buy CAMS ltd For Target Rs.900 By Emkay Global Financial Services Ltd
CAMS reported healthy performance in Q4FY26, with revenue at Rs3.95bn (+1% QoQ) and EBITDA margin at 46.3% (+50bps QoQ) – both coming in higher than consensus’ and our estimates. Revenue growth was largely driven by the non-MF based revenue (+7% QoQ) while MF-based revenue was largely flat owing to muted growth in MF AUM. Going forward, the management remains confident of growing the non-MF based revenue by ~20%, on the back of the CAMS PAY, CAMS AIF, and CAMS repository businesses. While the mgmt has not engaged in any negotiations with AMCs, it expects a muted impact from the change in TER regulations. Ahead, cost optimization remains the key focus, as the company continues to witness improved productivity. To bake in the Q4 developments, we tweak our FY27-28 estimates which results in ~1-2% increase in PAT. We maintain BUY on CAMS and increase Mar-27E TP by ~6% to Rs900 from Rs850 implying FY28E P/E of ~35x.
Non-MF drives revenue growth; cost optimization drives healthy margins
Q4FY26, revenue at Rs3.92bn increased 1% QoQ, led by ~7% growth in the nonMF based revenue while MF AUM based revenue was largely flat owing to volatile markets. Among non-MF businesses, CAMS PAY and CAMS Repository remained the fastestgrowing segments while CAMS KRA witnessed a decline. Employee cost increased ~1% QoQ, while Other expenses were largely flat QoQ. Thus, EBITDA margin at 46.3% expanded by 50bps QoQ, beating our estimate of 43.7% and leading to ~2% QoQ growth in EBITDA. However, PAT at Rs1.26bn increased ~1% QoQ on account of higher depreciation, and was higher than our estimate of Rs1.15bn.
Non-MF revenue to grow ~20%; minimal regulatory impact on MF yields
The management expects the non-MF based revenue to grow ~20% in FY27, led by the Payments, AIF, and Insurance repository business. Further, the management expects CAMS KRA to deliver flat revenue growth on account of the impact on pricing being offset by higher volumes and increased revenue from NSE KRA business acquired recently. Additionally, the company targets launching a new product, ConsenPro, which is likely to add to the non-MF revenue growth. The management expects minimal impact from 1) change in MF asset mix toward passive segments and 2) on account of the change in TER regulations. Further, investments in the re-architecture platform have driven cost efficiency and improvement in productivity, which is expected to drive a fall in headcount in FY27, consequently driving margin expansion.
We maintain BUY and increase our TP to Rs900
To bake in the Q4 developments, we tweak our estimates which results in ~1% increase in revenue and 70-100bps increase in EBITDA margin over FY27-28E. However, our PAT estimate increases by ~1-2% over FY27-28, owing to higher depreciation. We maintain BUY on the stock and increase Mar-27E TP by ~6% to Rs900 from Rs850 implying FY28E P/E of ~35x.
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