Monopoly stock trading at discount of more than 25% to add to your watchlist

According to NSE India, The depositories, clearing houses, and intermediaries industry in India plays a crucial role in the financial market, facilitating over Rs 200 trillion in transactions annually. With two primary depositories—NSDL and CDSL—over 99 percent of securities settlements occur electronically, enhancing efficiency and security for investors. 

Reason for rise 

With a market capitalization of Rs 18,716.61 crore, the shares of Computer Age Management Services Ltd were trading at Rs 3,786.50 per share, increasing around 2.20 percent as compared to the previous closing price of Rs 3,705.00 apiece. 

Matter Explanation 

The company hit its 52-week or all-time high in December 2024 at Rs.5,367.45 apiece and, comparing the same with the current stock price prevailing in the market, there is a discount of approximately 29 percent. 

Financial Performance 

The company delivered a strong quarter despite a capital market slowdown, with 28 percent revenue growth YoY. Mutual fund revenues grew over 28 percent, driven by 38 percent-39 percent AUM growth. Non-MF revenue rose 22 percent. EBITDA increased 34 percent with 47 percent margins, while PAT surged 40 percent, achieving a 32.6 percent PAT margin, up 300 basis points YoY. 

Operational Highlights 

CAMS secured all three MF-RTA mandates, including Jio BlackRock and Pantomath MF. AUM grew 38%, with equity assets up 51%. Net equity inflows reached ₹97,000 crore, reflecting strong demand. The quarter saw accelerated mutual fund activity, with 35 new schemes launched. 

Market Position and Strategy 

CAMS dominates the MF-RTA space, securing 6 of 7 recent AMC mandates. It aims to sustain growth by targeting emerging clients and ensuring high service standards. With a 70% share in NFO collections, CAMS demonstrates strong market penetration, reinforcing its leadership in the mutual fund services sector. 

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Challenges and Guidance 

Management expects yield pressure from potential pricing changes for 1-2 clients, with compression exceeding the historical 3%-3.5% range. However, profitability should be maintained through automation and efficiencies. A cautious outlook remains on KRA revenues due to capital market dependency, which could impact future growth. 

Future Outlook 

CAMS plans to increase non-MF revenue to 20% of total revenue within 2-3 years. The company is expanding its offerings in insurance repositories and digital payments. Management remains confident in sustaining growth across both MF and non-MF segments, despite market fluctuations, by strengthening its product portfolio and market presence. 

Monopoly Position 

CAMS (Computer Age Management Services) holds a monopoly position in the mutual fund registrar and transfer agent (RTA) segment, holding a 68% market share based on assets under management (AUM) as of Q3FY25. 

Company profile 

Computer Age Management Services Limited is an India-based technology company focused on the capital markets, and banking, financial services, and insurance (BFSI). The Company provides financial infrastructure and services to mutual funds (MFs), alternative investment funds (AIFs), insurance companies, and other financial institutions. 

Written by Abhishek Singh

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