Buy CAMS; target of Rs 4900: Motilal Oswal

Motilal Oswal's research report on CAMS

CAMS reported operating revenue of INR3.5b in 1QFY26 (6% miss), up 7% YoY, driven by a 9% YoY growth in MF asset-based revenue to INR2.6b. Total operating expenses grew 10% YoY to INR2b (in-line). Employee expenses/other expenses rose 8%/13% YoY to ~INR1.2b/INR774m. EBITDA increased 3% YoY to INR1.5b, reflecting an EBITDA margin of 43.6% (vs. 45.2% in 1QFY25 and our estimate of 45.5%). Management guides for margins to sustain at over 45%. PAT grew 1% YoY to INR1.1b (10% miss) in 1QFY26, driven by the lower topline growth.

Outlook

expect revenue/EBITDA/PAT to post a CAGR of 9%/10%/11% over FY25-27. We reiterate a BUY rating on the stock with a one-year TP of INR4,900, premised at a P/E multiple of 42x on FY27E earnings.