CAMS - Computer Age Management Services Limited Share Price

In the Q4 FY '25 Earnings Conference Call for Computer Age Management Services Limited, management provided an optimistic outlook, projecting continued growth in FY '26. They reported a robust year with a revenue increase of 25%, with mutual fund (MF) revenue growing by 25% and non-MF revenue nearly matching that performance. Management indicated confidence in achieving high double-digit growth rates, targeting a sustainment of 24% to 25% growth in non-MF revenue.

For FY '25, the absolute profit after tax (PAT) grew by 33%, with margins nearing 32%. Management highlighted that despite a volatile market affecting capital flows and new demat accounts, the business achieved significant results, with a market share of 68% based on assets.

Looking ahead, management forecasted that non-MF revenue, accounting for 13% of total revenue, would continue to expand, while they anticipate operational efficiency to sustain EBITDA margins around 44-46%. Notably, they expect some pressure on yields due to price adjustments, forecasting a year-on-year yield drop of approximately 7%, while overall margins might decline.

Key forward-looking points included:

• Sustained high double-digit growth in non-MF revenue, projected between 24-25%.
• A notable margin target of 44% for FY '26, slightly lower than FY '25 due to planned pricing adjustments.
• Gradual recovery in AUM expected to drive profitability.
• New business streams including innovative products like CAMSPay and BIMA-ASBA contributing significantly to future growth.

Management expressed confidence in operational resilience despite external market pressures, indicating a strong foundation for continued growth in both MF and non-MF segments moving forward.

1. Question: "In terms of the contours of the renegotiated contract, can you explain why the yields drop will happen over the next 2-3 quarters?"

Answer: The commercial construct involves staggering impacts, where pricing for some classes will take effect gradually. We aimed for a definitive transition rather than deferring it all at once. Hence, half the impact is already booked and the rest will be seen in the next two quarters.

2. Question: "On the insurance repository, how much revenue is expected from the LIC contract and what about pricing environment?"

Answer: Currently, we see an increase from 40 to 50 lakh policies, with LIC expected to contribute 15 to 20 lakh. Integration happens by July. Pricing remains stable due to long-term contracts, leading us to anticipate significant market growth.

3. Question: "What are your projections for employee expenses in FY '26?"

Answer: We expect a less than 10% increase in overall costs, effectively keeping employee costs stable. Given our investments in talent and automation, we aim for employee expenses to be around 32-33% of revenues.

4. Question: "What is the revenue split for your payment aggregator business now, between MF and education sectors?"

Answer: Currently, we anticipate a 55% mutual fund and 45% non-MF split. We expect that in FY '26, we will see this shift closer to 60% non-MF as we expand into new domains like education and insurance.

5. Question: "With AIF clients reaching over 200, why hasn't revenue seen significant growth?"

Answer: Though we've crossed 200 clients, AIF operates on a fixed price basis, and competition is intense. Growth has been approximately 18% annually, which we consider healthy in a competitive and pricing-sensitive environment.

6. Question: "What should we expect in margins for FY '26 in light of impacts from price renegotiations?"

Answer: We anticipate FY '26 margins to be around 44%, accounting for a 7% compression in yields and a moderate increase in mutual funds. Non-MF businesses won't dramatically offset this yield pressure, thus limiting margin improvements.

7. Question: "Can you provide clarity on your depreciation expense trend going forward?"

Answer: We're expecting the recent depreciation figure to be the run rate moving forward, as we have significant investments in compliance and IT infrastructure. The depreciation from new capex will start affecting the numbers significantly by late FY '26.

8. Question: "What has been the market share for net sales in FY '25?"

Answer: Our net sales market share has averaged in the mid-60s percentage for FY '25, affected by factors such as NFO performance and the competitive landscape.

9. Question: "What is the Employee count and KRA numbers currently?"

Answer: We currently have around 8,100 employees. In terms of KRA accounts, we have surpassed 1.9 crores, indicating robust activity in that segment.