The Rs 2,244-crore IPO of Computer Age Management Services (CAMS) has seen strong response from investors on September 23, the last day of subscription.
The public issue is subscribed 46.98 times so far, as the bids of 60.27 crore equity shares have been received against the reduced IPO size of over 1.28 crore equity shares, the subscription data available on exchanges showed.
It had on September 18 raised Rs 667 crore from several anchor investors at higher end of price band of Rs 1,229-1,230 per share, as a result the issue size has been reduced to over 1.28 crore equity shares from 1.82 crore shares earlier.
The response from non-institutional investors looked strong on last day as their reserved portion was subscribed 111.84 times, while the portion set aside for retail investors witnessed 5.55 times subscription and that of qualified institutional buyers 73.17 times.
The reserved portion of employees is subscribed 1.16 times. Global private equity firm Warburg Pincus-backed CAMS reserved up to 1,82,500 equity shares for eligible employees.
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NSE Investments, the subsidiary of National Stock Exchange, will divest its entire equity stake in CAMS via this IPO.
CAMS is a technology-driven financial infrastructure and services provider to mutual funds and other financial institutions with over 2 decades of experience. It is India's largest registrar and transfer agent of mutual funds with an aggregate market share of 70 percent based on mutual fund average assets under management (AAUM) managed by its clients and serviced by them during November 2019.
Ajcon Global believes the issue is priced at a premium owing to its robust business model and major presence in Mutual Funds RTA space which has a big opportunity.
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"The recent fancy for companies with differentiated business model and their stellar listing also instills confidence in this issue. With due consideration to above factors we recommend subscribe the issue," said the brokerage.
Ajcon likes the company due to duopoly MF-RTA industry; diverse portfolio of technology-enabled services; PAN India physical network; scalable technology enabled ecosystem; strong promoter group and key shareholders like Great Terrain (an affiliate of Warburg Pincus), HDFC, HDFC Bank; strong EBITDA margins and balance sheet, consistent financial performance over the years; and ability to generate free cash and strong return ratios.
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CAMS' mutual fund clients include 4 of the 5 largest mutual funds as well as 9 of the 15 largest mutual funds based on AAUM during July 2020.
CAMS offers an integrated and customized portfolio of services through its pan-India physical network comprising 271 service centres spread over 25 states and 5 union territories as of June 2020, and which are supported by call centres in 4 major cities, 4 back offices.
It has developed in-house and own Investrak.NET, a mutual fund transfer agency platform, myCAMS, a mobile device investor interface application, GoCORP, a distributor focused application, and MFDEx a market intelligence product/information database, among many other services.
Jaikishan Parmar, Senior Equity Research Analyst at Angel Broking believes investors should hold this stock for the long term also.
"As its reinvestment requirement is very low because it is a technology-led company, it does not have to do heavy capex to run regular business. Hence, at the end of the year, the CAMS left with a strong cash flow which CAMS uses to pay a generous dividend to a shareholder. Historically it has maintained a dividend payout ratio of 65 percent. An investor can expect a similar dividend payout in the future also," said Parmar who has given subscribe rating to the issue.