9.1 C
London
Thursday, April 22, 2021

CAMS: Start with an “ add ” and DCF based FV of Rs 1850

Must read

UK Time Newshttps://www.uktimenews.com
UK Time News is your daily dose of Latest News, Entertainment, Music, Fashion, Lifestyle, World, Cricket, Sports, Politics, Tech, Business News Website. We provide you with the Latest Breaking News Straight from the UK & all around the World on different categories.

We start a hedge with an “add” note and a fair value based on DCF of Rs 1,850 (5% increase).

Key choice among MF games: CAMS ‘outlook is directly linked to that of the Indian MF industry, with around 70% market share in MF AAUM. As a dominant operator in a duopoly ATR market, its scale offers protection against market share volatility. We note that the concentration of its income among the best AMCs limits its pricing power and squeezes returns. We expect its improved productivity and unit savings to mitigate the slowdown in AUM MF growth to generate a 14% EPS CAGR in fiscal year 2021-24E. We start a hedge with an “add” note and a fair value based on DCF of Rs 1,850 (5% increase).

READ  Will Apple Stock’s Q2 Results Beat Consensus?
READ  Stocks in brief: Future Retail, Muthoot FinCorp, Maruti Suzuki, AU Small Finance Bank, BPCL, bank stocks

CAMS occupies a dominant position in the Indian duopoly of registrars and transfer agents (RTAs), reducing the risk of market share shifts. This makes it one of the best MF games and gives visibility to its earnings. We remain cautious about the medium-term challenges of the Indian mutual fund industry, which will likely put pressure on CAMS revenues, resulting in a (moderate) 14% EPS CAGR in fiscal year 2021-24E .

The CAMS model is intrinsically directly related to Indian AAUM MF, serving around 70% of Indian AUM MF, making it largely independent of market share movements among AMCs. Its MF revenues (87% of total in FY2020), although primarily related to AUMs served, have lagged asset growth due to continued compression of yields. This is due to the high concentration of revenues from the main customers (~ 36% of the first 2 AMCs and ~ 67% of the first 5), which limits its pricing power vis-à-vis AMCs.

READ  IBM Stock's first quarter results to beat the consensus?
READ  JnJ Amid Trending Stocks This Week

Together with its subsidiaries, CAMS provides several value-added services to mutual funds, insurance companies and AIFs as well as associated stakeholders such as distributors and investors. Its commercial proposition is underlined by a wide distribution, a diversified bouquet of products, domain expertise and proprietary software and technological platforms.

Get live stock quotes for BSE, NSE, US market and latest NAV, mutual fund portfolio, see latest IPO news, top performing IPOs , calculate your tax using the income tax calculator, know the best market winners, the best losers and the best equity funds. Like us on Facebook and follow us on Twitter.

READ  Analysts Corner: launch CAMS coverage with “add”; FV based on DCF of Rs 1,850

UK Time News is now on Telegram. Click here to join our channel and stay up to date with the latest news and updates from Biz.

.

More articles

15,129FansLike
4,596FollowersFollow

Latest article