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Add Computer Age Management Services, target price Rs 2885: HDFC Securities

HDFC Securities has add call on Computer Age Management Services with a target price of Rs 2885. The current market price of Computer Age Management Services is Rs 2354.5.

Time period given by analyst is year when Computer Age Management Services Ltd. price can reach defined target.

Computer Age Management Services Ltd., incorporated in the year 1988, is a Small Cap company (having a market cap of Rs 11728.03 Crore) operating in Financial Services sector.

Computer Age Management Services Ltd. key Products/Revenue Segments include Other Services for the year ending 31-Mar-2021.

Financials

For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 247.43 Crore, up 2.32 % from last quarter Total Income of Rs 241.83 Crore and up 21.33 % from last year same quarter Total Income of Rs 203.94 Crore. Company reported net profit after tax of Rs 73.84 Crore in latest quarter.

Investment Rationale
CAMS reported an in-line revenue (+2% QoQ, similar to other AMCs); however, higher admin and opex led a 4% sequential dip in core income to INR947mn. MF AAUM witnessed a 1pps dip in market share to 69% alongside continued compression in core revenue yields (albeit milder compression compared to listed AMCs). Market leadership in the duopoly RTA market, significant entry barriers, and high switching costs position CAMS favorably; however, the brokerage remains wary of sustained pricing pressure on AMCs spilling over to RTAs in the near to medium term. It builds in FY22-24E revenue/operating profit CAGR of 10/12%, led by buoyant equity flows and rising contribution from nascent businesses, including payments, AIF, CRA and insurance. It values CAMS at 42x Sep-23E EV/NOPLAT + Sep-22 cash and investments. It maintains ADD with a target price of INR2,885; the stock is currently trading at FY23E/24E EV/NOPLAT of 37x/32x and P/E of 36x/32x.



Promoter/FII Holdings
Promoters held 23.75 per cent stake in the company as of 31-Dec-2021, while FIIs owned 30.43 per cent, DIIs 13.25 per cent.

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