Technology-driven financial infrastructure and service provider Computer Age Management Services has started off the first day on a strong note by listing with a massive 23.4 percent premium over issue price on October 1.
The stock opened at Rs 1,518 per share on the BSE, against final issue price of Rs 1,230, which was largely on expected lines given the strong financials, healthy cash position, debt-free status, high return ratios and strong market share.
At 10:02 hours IST, it was trading at Rs 1,505.40, up by Rs 275.40 or 22.39 percent compared to issue price, with volumes of 38.98 equity shares.
The Rs 2,244-crore public issue witnessed a healthy 47 times subscription during September 21-23 due to above-mentioned reasons. It is also backed by US-based private equity firm Warburg Pincus through Great Terrain.
National Stock Exchange having a 37.5 percent stake through NSE Investments exited the company, which entirely offered through the public issue. Hence the company did not receive any fund from this IPO.
CAMS is India's largest registrar and transfer agent (RTA) of mutual funds with an aggregate market share of around 70 percent based on mutual fund AAUM managed. The mutual fund clients include four of the five largest mutual funds as well as nine of the 15 largest mutual funds based on AAUM.
"There is strong revenue visibility for CAMS, as they have a 70 percent market share of the MF registrar business. The leader and bank-led MF are gaining market share which is positive for CAMS revenue visibility. It is an asset-light business model hence end of the year investor can expect a healthy dividend, and there is a possibility that dividends per share might increase every year," Jaikishan Parmar, Senior Equity Research Analyst at Angel Broking told Moneycontrol.
CAMS' revenue grew at a CAGR of 14 percent driven by strong growth in AAUM (around 15 percent CAGR) during FY17-FY20. In the same period, its EBITDA and net profit grew at a CAGR of 13 percent and 12 percent respectively.
"The company carries no debt obligation, thus translating in healthy return ratios with ROCE/ROE of 37/35 percent. Furthermore, it is consistently paying dividend with FY20 payout at 40 percent," LKP Securities said.