No. From 2015.55 to 5276.20 = 162 % increase = 2.6 X (to be precise).
If RBI cuts rates, market decline will accelerate. I hope they don’t cut. (I know this sounds contrary to mainstream narrative, but that is what empirical data shows). Let’s see.
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I think CAMS movement against the Index was primarily due to its majority revenue coming from MF business. But going forward(long term), I think there would be bit of divergence from this view as its business is getting diversified to other areas.
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Damodaran had argued similarly. As I wrote this, I realized RBI cut rates.
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I came across American Express business - it charges 2.5% to the merchants. However, the best part of it was that, it’s revenue increases with inflation. As the inflation rises, the price of goods and services also rises and given Amex still shares the same (2.5%) over the years, the revenue still increase as over all prices surge.
Given that, if we consider CAMS in place of Amex (don’t comment that how they can be same, there is no comparison and all). Consider clients of MF as customers (Customers using Amex, MF as Merchants) and customers buy MF, CAMS charges the MF for the transaction, over years, MF increases their prices with inflation. Does CAMS increase their prices with inflation, or it lowers the prices as MF size increases over the years?
Just for discussion. I’m holding CAMS from lower levels.
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They follow ‘inverted pyramid pricing mechanism’ where, as the AUM of a fund house increase, the pricing reduces or does not increase by the same magnitude.
Please go through the thread, its extensively discussed.
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CAMS follows an inverted pyramid pricing model, its fees per rupee of AUM will shrink, but total AUM growth can offset the lower fees.
Mutual fund AUM in India has been growing at ~15-20% CAGR, which can sustain CAMS’ growth despite lower fee rates.
Risks: 1) During bear markets, redemptions increase and new inflows slow, impacting revenue.
2) If rivals like KFin Technologies cut prices aggressively, CAMS might have to reduce fees further.
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I was thinking, if you invest in CAMS vs any AMC (Nippon AMC or Aditya AMC).
What is the difference in the returns that we get?
What will be more convenient holding?
Just a question, I was eyeing on NAM India AMC!
Very nice analysis @Chandragupta . Do you see similar corelation is case of AMC stocks as well such as HDFC AMC?
Division-wise revenue growth and key highlights for Q3 FY25 :
| Division | Revenue Growth | Key Highlights |
|---|---|---|
| Overall | Just short of 28% | Despite a slowdown in capital markets, CAMS reported strong revenues, profits, wins, product launches, and market share gains. EBITDA grew by 34%, and PAT grew over 40%. |
| MF | In excess of 28% | MF revenues grew on the back of about 38%-39% growth in assets. CAMS won all 3 MF-RTA mandates on offer: Jio BlackRock, Pantomath MF, and Choice. Won the second MF-RTA migration mandate from competition. Equity assets crossed the INR25 lakh crore mark. Net registration share increased to 64% from 60%. |
| Non-MF | About 22% | Despite market conditions, non-MF revenue showed substantial growth. Share of non-MF revenue is at about 12.5%. |
| CAMSPay | 53% | Stellar revenue growth driven by digital payments. Added almost 24 new logos in Q3. Empanelled by LIC for auth and payment gateway services. |
| CAMS KRA | 27% | Grew despite a slowdown in new account openings. Added 20+ new financial entities and one of the top 5 brokerages. Launched WhatsApp KYC. |
| Alternatives | Not explicitly stated, but included in non-MF growth | Added 21 new clients. CAMS WealthServ had almost 185+ sign-ups. GIFT City now has 25 clients managing over $1 billion of AUM. |
| Repository (REP) | Not explicitly stated | Scaled to INR10 lakh a quarter. Won a second life insurer, Star Union Dai-Chi, to give 100% of their policy base. Bima Central unique base crossed 4 lakh consumers, volumes grew 40%. |
| CAMSfinserv | Not explicitly stated | Won a mandate for account aggregator, TSP, and analytics from one of the largest scale banks in the country. Think360 won a TSP++ analytics mandate from a top bank. |
Key Observations:
- Overall Growth: CAMS experienced strong overall revenue growth, driven by both MF and non-MF segments.
- Mutual Funds: MF revenue growth was fueled by AUM expansion and key wins.
- Non-MF Diversification: Non-MF businesses contributed significantly to overall growth, indicating successful diversification efforts.
- Digital Initiatives: CAMS’ digital initiatives, such as WhatsApp KYC, are gaining traction.
- New Client Acquisition: CAMS successfully acquired new clients across various segments.
- Profitability: EBITDA and PAT growth exceeded revenue growth, showcasing cost efficiency and sound execution.
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I was going through AMC businesses, I figured that most of the AMCs are going through pricing pressure. Most of them increased their management fees and then reduced it.
Apart from that, I see CAMS isn’t facing such problems. However, if someone is betting on digitalizing of India, and Indian Markets. One should go with CAMS and CDSL rather than a specific AMC or Broker (I haven’t studied brokers yet).
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