We proceed to be cautious about medium-term challenges to India’s mutual fund business, which is able to possible strain CAMS’ revenues, driving (reasonable) 14% EPS CAGR throughout FY2021-24E.
Key choose amongst MF performs. CAMS’ prospects are immediately linked to these of India’s MF business, with a market share of ~70% in MF AAUM. As a dominant operator in a duopoly RTA market, its breadth provides safety towards market share volatility. We do be aware that its income focus amongst prime AMCs limits its pricing energy and compresses yields. We anticipate its enhancing productiveness and unit economies to mitigate slower MF AUM development to drive 14% EPS CAGR over FY2021-24E. We provoke protection with an ADD score and DCF-based Truthful Worth of Rs 1,850.
We provoke protection on CAMS with an ADD score and Truthful Worth of Rs 1,850 (5% upside). CAMS has a dominant place in India’s registrar and switch agent (RTA) market duopoly, which reduces dangers of market share actions. This makes it top-of-the-line MF performs and offers visibility for its earnings. We proceed to be cautious about medium-term challenges to India’s mutual fund business, which is able to possible strain CAMS’ revenues, driving (reasonable) 14% EPS CAGR throughout FY2021-24E.
CAMS’ mannequin is intrinsically immediately linked to Indian MF AAUMs, serving about 70% of Indian MF AUMs—this makes it broadly agnostic to market share actions amongst AMCs. Its MF revenues (87% of whole in FY2020), though principally linked to served AUMs, have lagged asset development because of persistent yield compression. It is a results of the excessive income focus from prime purchasers (~36% from top-2 AMCs and ~67% from top-5), which limits its pricing energy vis-a-vis AMCs. Together with its subsidiaries, CAMS offers a number of value-added providers to mutual funds, insurance coverage corporations and AIFs in addition to associated stakeholders like distributors and buyers. Its enterprise proposition is underscored by broad distribution, various product bouquet, area experience and proprietary software program and expertise platforms.