CAMS dips 7% as 3% equity changes hands on BSE; stock hits 6-month low

Shares of Computer Age Management Services (CAMS) plunged 7 per cent to Rs 2,690.55, hitting a six-month low on the BSE in Monday's intra-day trade, on the back of heavy volumes. The stock of the financial services company hit its lowest level since June 10, 2021. It had hit a 52-week high of Rs 4,064 on September 1, 2021 and a 52-week low of Rs 1,473.20 on December 11, 2020.

At 09:15 am, around 1.56 million equity shares, representing 3.18 per cent of total equity of CAMS, changed hands on the BSE. The names of the buyers and sellers could not be ascertained immediately.

At 12:18 pm, the stock was down 6 per cent at Rs 2,734.50, as compared to a 0.10 per cent gain in the S&P BSE Sensex. A combined 5.94 million shares or 12.17 per cent of total equity of CAMS had changed hands on the BSE and NSE.

CAMS is a technology-driven financial infrastructure and services provider to mutual funds and other financial institutions. The Company is India's largest registrar and transfer agent (RTA) of mutual funds with an aggregate market share of approximately 70 per cent based on mutual fund average assets under management (AAUM) managed by its clients. Its mutual fund clients include all the top five mutual funds in the country as well as ten of the fifteen largest mutual funds in the country (based on AAUM during September ’2021).

For the first half (April-September) of financial year 2021-22 (H1FY22), CAMS had reported 48 per cent year on year (YoY) growth in profit after tax (PAT) of Rs 72.56 crore. The company’s revenue grew 33 per cent YoY to Rs 227.60 crore.

"With market leadership in the duopoly RTA market (70 per cent share of the MF MAAUM), CAMS is a proxy to India’s growing asset management industry. Significant entry barriers coupled with high switching costs place CAMS in a uniquely advantageous position," according to analysts at HDFC Securities.

Despite the share of equity improving in the mix (+310bps QoQ), MF asset-based revenue yields were flat sequentially, indicating sustained pressure on yields. CamFinserv, one of the subsidiary businesses, has tied up with a few top banks and commenced its account aggregator (AA) operations.

Although the outlook for the AA business remains positive, any meaningful revenue generation will need sizeable investments to develop a Financial Information User (FIU) network. FT AMC’s operations have started to generate revenue, though EBITDA remains negative (projected to break even by Q4FY22), the brokerage firm had said in results update.