Buy CAMS; target of Rs 2800: Motilal Oswal

Motilal Oswal's research report on CAMS

CAMS reported a net profit of INR736m, a decline of 5% YoY and a 10% miss on our estimates. The miss is primarily on account of lower-than-estimated AUM for Dec’22. Share of Non-MF business remained steady, which is expected to increase from 1QFY24. Account Aggregator, AIF/PMS RTA and Insurance Repository are likely to be the drivers for growth in non-MF business share of revenues. With most of the contracts re-negotiated, the company does not expect any large hit in case of any further cuts in TER by the regulator for AMCs. Our estimates broadly remain unchanged, but we lower our target price to INR2,800 with a revised P/E multiple of 33x on FY25 earnings (36x Sep’24 earnings earlier). The cut in multiple is to reflect the risks on AMC business The board has declared an interim dividend of INR10.5.

Outlook

Our estimates broadly remain unchanged, but we lower our target price to INR2,800 with a revised P/E multiple of 33x on FY25 earnings (36x Sep’24 earnings earlier). The cut in the multiple is to reflect the risks on AMC businesses.