Motilal Oswal’s IPO report on Computer Age Management Services
Computer Age Management Services Ltd. (CAMS) is a technology-driven financial infrastructure and services provider to MFs and other financial institutions. It is India’s largest registrar and transfer agent of MFs.
Integrated Business Model and longstanding relationships: CAMS is well-positioned to capitalize on the MF industry growth backed by its diverse portfolio of services, pan-India physical network, domain expertise and comprehensive risk management system. It has PAN India presence in 25 states with a network of 271 centres. It enjoys high entry barriers as replicating such an integrated business model in-house would be challenging for clients. Further the clients are sticky, given the deep integration CAMS enjoy with them.
Valuation and Outlook
At the higher end of the price band, the issue is valued at 35x FY20 P/E, which seems fully priced in. However, we like the company, given its leadership position, integrated business model, pan-India presence and robust financials. We recommend Subscribe for Long Term to the IPO as CAMS enjoy first mover advantage, asset light business model and high entry barriers. Risk: (1) Top 5 clients contribute 71% to its revenues, (2) technological disruption and (3) data security & privacy.
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