Computer Age Management Services (CAMS) is a Mutual Fund Transfer Agency to the Indian Asset Management Companies with a share of 69.6% of the assets under management (AuM) and a technology-enabled service solutions partner to Private Life Insurance, Private Equity Funds, Banks, Non-Banking Finance Companies (NBFC’s).
The company was incorporated in year 1988. CAMS is co-owned by – NSE Investments Limited(subsidiary of National Stock Exchange), HDFC Bank group, Warburg Pincus LLC (a leading global private equity) and Acsys Investments Private Limited.
About CAMS IPO
The IPO consists of an offer for sale of 1,82,46,600 equity shares where NSE Investments will be selling its shares. Hence, all the money raised from this IPO will go to NSE Investments and the company will not get any money from this offer.
Why NSE Investments selling it’s stake through OFS (Offer for Sale)?
NSE was asked by the Securities and Exchange Board of India (SEBI) to divest its entire 37.4% holding in CAMS after it failed to seek the market regulator’s approval while buying the stake in 2013. SEBI had asked NSE to pare the entire stake within a year.
IPO opens on: Sept. 21
IPO closes on: Sept. 23
Face value: Rs 10
Listing at: BSE
Minimum Bid: 12 shares (and in multiples of 12 shares thereafter)
Price Band: Rs:1229 – 1230
What analysts say
The opportunity landscape for the MF business in India is huge, given low penetration and financialization of household (HH) savings, thus providing long-term visibility. At Rs 1,230 per share (IPO price), CAMS is priced at 35x FY20 EPS, at a 10-15 percent discount to listed AMCs, Exchanges, and Depositories. We expect the stock to trade in-line with other comparables and further re-rate— IIFS Securities
We recommend investors to subscribe to the IPO for listing gains. The company has a robust business with strong market leadership indicated by a 70% market share in the mutual fund RTA industry. Given the high entry barriers and the near duopoly nature of the market, the moat of the company remains intact. CAMS has also delivered strong operating margins and shareholder returns consistently and maintains a clean balance sheet with negative working capital.— Nirali Shah, Senior Research Analyst, Samco Securities
At the upper price band of Rs.1,230, CAMS is available at a P/E of 34.6x and when we annualize Q1FY21 numbers we arrive at a P/E of 36.7x for FY21E on a post-issue basis. Given that there is no listed peer to compare, and based on stable financial, we assign a subscribe rating on this IPO,— Geojit Financial Services
During FY17-20, CAMS’s overall revenue grew at a CAGR of 14% driven by strong growth in AAUM (15% CAGR). Over the same period, the EBITDA and net profit grew at a CAGR of 13% and 12% respectively. The company carries no debt obligation, thus translating in healthy return ratios with ROCE/ROE of 37%/35%. Furthermore, it is consistently paying dividend with FY20 payout at 40%. At higher price band ( ₹1,230), CAMS is valued at 35 times FY20 earnings, has leadership position, zero debt, healthy cash position and high return ratios. We recommend to subscribe— LKP Securities
Future outlook will largely depend on the increase in AIF and insurance repository business improvement, which look very promising for the long term, hence we advise investors to apply with a long term horizon,— SPA Securities