Hi,
Do you use any AI tool like notebook LLM to get this summary?
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The results are quite disappointing, having a significant impact on margins. Management expects around 24-25% non-MF revenue growth and approximately 45% EBITDA margin by FY26.
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Sorry to differ, What is so “disappointing” in the results, OPM is in same range, just Ye Dil Mange More…
I still find this quite okay, given the fact so many things happening around the world, giving investor every opportunity to leave trading/investing/SIPs.
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Yield compression because pf contract regonatioation was marked already by mgmt, same with kfin as well
Given that flat results are okay, as AUM was in goo shape aum drop because of market volatility can derate the eps though
Hope cams is able to diversify meaningful in non mf this year, in this concall it sounded like they now do want to address it
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A day before the results, CAMS announced acquisition of the KRA business of NSE for Rs.7 crores. NSE’s KRA business earned revenues of Rs.2.76 crores and reported a loss of Rs.2.59 crores for FY25, as per the Press Release.
The announcement may be more significant in the long run than what it seems at first sight. The transaction reduces the number of KRA’s in the country from 5 to 4. Of these, CDSL Ventures (CVL) is the largest with reportedly a 65 % market share and CAMS is the second largest with 25 % share. It is possible that over time the other two – NSDL & Karvy also exit the business, citing lack of scale. This would make KRA a duopoly market and fortify CAMS’ position further. Even at present, the CAMS’ KRA business is the most profitable of all its non-RTA businesses. It grew almost 30 % YoY in FY25, reporting revenues of Rs.45 crores and a PBT of Rs.27 crores.
Meanwhile, the integration of KRAs with the Central KYC Registry is taking the role of KRAs beyond capital markets to other parts of the financial ecosystem. And the government continues to broaden their scope of work further.
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Any views on its competitor kfintech?
Do you have any views on comparison of Kfintech with CAMS? While Kfintech is growing faster in terms of salesgrowth, along with the recent partnership of Jio Blackrock, the stock of Kfintech has rallied in past sometime. Do you have views around on the same/ comparison of CAMS vs Kfintech?
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Hi @sitansu.gandhi, Thanks for asking. I don’t have any particular view on KFintech. Their business models are slightly different in the non-MF space due to KFintech’s international exposure and issuer solutions business. My shareholding in CAMS dates back to before KFintech got listed, and I have not felt the need to move out or add a second stock in the same space.
That said, CAMS’ more concentrated MF RTA exposure probably offers higher scope for profitability improvement in the coming years though topline growth may be higher at KFintech. Look at the following slide from CAMS presentation.
My impression is that hundreds of people are involved today in these tasks (and similar such). All these tasks will get automated gradually using AI, leading to substantial cost savings and corresponding margin improvement. At least a 5 to 10 % margin improvement can come solely from deploying AI across its operations, once the ongoing cloud project is completed next year. This was partly discussed in the recent concall as well though Mr. Anuj Kumar did not quantify the benefit.
The risks to CAMS come from depressed domestic markets however, due to lack of international exposure like KFintech.
(Disc.: Invested)
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Growth Rate Analysis:
Segment Wise:
RTA comparison with KFIN Tech:
The landscape seems very similar to AMCs where AUM growth is more or less in line with industry CAGR of 20% but topline grows slower due to declining yields (A first principles mental model to project future revenues)
Disc - Not invested, but studying the capital market companies to buy at the right price
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My observation is that, if you buy any AMC /CAMS and Capital market related stock when there is negativity about the market and when NIFTY/SENSEX has corrected by 15% to 20% or so, you will get such stocks at depressed valuations. Look at the old charts of HDFC AMC AND CAMS, there was sharp corrections in 2022, and then sharp rise in 2024.
At current valuations, the upside in stock price looks limited and you should able to get normal 10%-12% CAGR provided market do not crash much.
For very good returns of 17% or above, valuations could be more important, lesser the better. Finding such attractive valuations is tough, but market will throw surprises from time to time.
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