Release Date: January 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Computer Age Management Services Ltd (BOM:543232, Financial) reported a strong quarter with a 28% revenue growth, despite a slowdown in the capital markets.
- The company achieved a 34% growth in EBITDA, with a margin of 47%, indicating strong cost management and operational efficiency.
- PAT grew over 40%, with a PAT margin of 32.6%, showcasing robust profitability.
- The company won all three MF-RTA mandates on offer, including prestigious deals like Jio BlackRock, demonstrating market leadership.
- Non-MF revenue grew by 22% year-on-year, with significant contributions from CAMSPay and CAMS KRA, indicating diversification success.
Negative Points
- Revenue growth slowed compared to the previous quarter, with a decrease from 32% to 28%, reflecting market challenges.
- Non-MF revenue growth decreased from 32% in the previous quarter to 22%, indicating potential volatility in this segment.
- The company anticipates yield pressure in the coming quarters, which could impact margins despite efforts to mitigate it.
- KRA business faced a slowdown due to decreased new account openings in the capital markets, affecting revenue growth.
- There is a potential risk of increased competition in the MF-RTA space, as indicated by the shift of an AMC from a competitor.
Q & A Highlights
Q: Can you provide details on the international mandate with CeyBank?
A: Anuj Kumar, Managing Director, explained that the CeyBank mandate is similar to a INR1,000 crore AUM Indian client, with the contract expected to bill a few crore rupees annually. It is not a large contract but a positive inbound inquiry, with operations expected to go live by April.
Q: Does the shift of an AMC to CAMS indicate increased competition or ease of transition in the RTA space?
A: Anuj Kumar stated that the movement between RTAs remains challenging and is not driven by commercial considerations. The shift is due to clients wanting to work with CAMS, and it does not necessarily make churning easier or create room for a third player.
Q: What is the impact of yield pressure on CAMS, and why is it occurring?
A: S. Ramcharan, CFO, mentioned that while most major contracts have been renewed with limited impact on yields, there might be some pressure due to historical pricing disparities. The company is confident in maintaining margins through automation and process improvements.
Q: How does CAMS plan to grow its non-MF business to 20% of the revenue mix?
A: S. Ramcharan highlighted that the non-MF business has been growing at over 30% in previous quarters, driven by new logo wins and annuity business. The company is confident in reaching the 20% target through organic growth and potential inorganic acquisitions.
Q: What are the reasons behind an AMC moving from a competitor to CAMS?
A: Anuj Kumar explained that the shift is due to the quality of CAMS' platform, service, and business controls. The decision is not driven by pricing, as CAMS charges a premium compared to competitors.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
