Buy CAMS; target of Rs 5100: Motilal Oswal

Motilal Oswal's research report on CAMS

The redesign of its transfer agent platform in Google Cloud will enhance the company’s control over the database, improve the ability to provide insights and reduce wastage due to easy availability and fungible additional capacity. The cutting-edge capability of Google’s software would also give an added advantage.  While the revenue trajectory of its MF business remains robust, CAMS has sharpened its focus on non-MF businesses to boost their revenue contribution to 20% by FY27 from 13% in FY24. The acceleration in revenue growth, profitability and market share of its nonMF segments will be driven by (a) track record of two wins a week in alternate investment funds (AIFs), (b) client base expansion with the GIFT City launch, (c) expansion of its KRA business to larger capital markets, (d) expansion of CAMSPay operations beyond MFs in new sectors like education and cards, (e) the acceleration of ePolicy conversions in CAMSRep by improving penetration, and (f) strong growth in transactions in CAMSFinserv.

Outlook

We expect CAMS to deliver a CAGR of 16.7%/22.2% in revenue/PAT during FY24-27E. We maintain our BUY rating with a revised 1-year target price of INR5,100 (premised on 42x Sep’26E EPS).

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