Manali Bhatia of Rudra Shares & Stock Brokers and Astha Jain of Hem Securities feels the listing premium could be 29-35 percent.
Computer Age Management Services, the largest registrar and transfer agent of mutual funds in India, will list its equity shares on October 1 after a successful IPO earlier this month.
Given the maximum bids at higher end of price band, the company has fixed final IPO price at Rs 1,230 per share. Equity shares will debut on BSE as well as National Stock Exchange.
Private equity firm Warburg Pincus-backed CAMS is likely to list with around 25-30 percent premium over issue price on Thursday as the company enjoys first mover advantage, from the said industry, on valuation perspective, experts feel.
Also the no direct comparable listed peer, asset light business model, 70 percent market share, strong revenue visibility, healthy financial etc also supported the listing premium, experts suggest.
"After healthy subscription demand in CAMS, we can expect a decent listing gain in the range between Rs 1,550-1,650 levels which translates 26-34 percent gain on allotment price (Rs 1,230). CAMS does not have a directly comparable listed peer in India and hence market always rewards a player who has the growth potential with high returns," Prashanth Tapse, AVP Research at Mehta Equities told Moneycontrol.
The premium in the grey market has been reduced in last couple of days to around Rs 310 from Rs 370-380, which could be due to the demand shifted to Mazagon Dock Shipbuilders which is available at around 100 percent premium over IPO prices, people privy to the development told Moneycontrol.
Manali Bhatia, Head-Research at Rudra Shares & Stock Brokers and Astha Jain, Senior Research Analyst at Hem Securities feels the listing premium could be 29-35 percent.
"Based on MF AAUM, CAMS enjoys the largest source of revenues having an aggregate market share of approximately 70 percent. Along with this its 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. Thus, we expect sound listing for the stock. It should list at a premium of around Rs 380-420 over the issue price," Manali explained.
CAMS, which was incorporated in May 1988 and promoted by Great Terrain Investment (an affiliate of US-based private equity firm Warburg Pincus), 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.
Company has grown its service offerings and currently provide a comprehensive portfolio of technology-based services and has leveraged its domain expertise, processes and infrastructure to diversify its offering of services.
CAMS key clients for its mutual funds services business include HDFC Asset Management, ICICI Prudential Asset Management, Aditya Birla Capital, SBI Fund Management, DSP Investment Managers, Kotak Mahindra Asset Management and Franklin Templeton Asset Management (India).
Among analysts talked to Moneycontrol, Jaikishan Parmar, Senior Equity Research Analyst at Angel Broking expects the minimum listing premium on Thursday.
"We expect CAMS can give more than 20 percent listing gain. The grey market premium shows healthy listing gains. Finally, the stock price direction depends on fundamentals of the company," he said.
CAMS raised Rs 2,244 crore via public issue, which comprised an offer for sale by NSE Investments, the subsidiary of National Stock Exchange which had been asked by the Sebi to divest entire stake of 37.5 percent in CAMS.
Company reported a growth of 4/4/9 percent CAGR in revenue/EBITDA/PAT respectively over FY18-20. However, it is a high margin business (EBITDA/PAT margin of 41/25 percent) with RoE of 32 percent.
CRISIL forecast's the mutual fund RTA business to grow at a CAGR of 15 percent over FY20-25 post a CAGR of 17 percent over FY15-20.
Further, given the significant under penetration of Insurance, AIF and other financial services the headroom for growth for solutions provider like CAMS is significant, IDBI Capital said.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.