CAMS - Q3 FY21 Result Update - YES Securities

(Rating: BUY, TP: Rs 2319, Upside 20%)

- Revenue growth - (1) MF based revenue growth driven by AUM growth and asset mix (Increasing share of Equity and Debt over Liquid) (2) Non-MF revenue impacted by shutting down of the Banking and non-banking services business, impact in insurance business and drop in ECS transactions.

- EBITDA Margin - Improvement in margin driven by (1) Increasing share of MF business (2) Some amount of lag between transaction volume and associated cost incurred. Going forward, management expects margin to be in the range of 38-39% as compared to 41% in the current quarter.

- We remain positive on CAMS business given our house view of robust equity market performance in the years to come. We raise our estimates to factor in 1) higher market return expectations from 12% to 15% and 2) higher EBIDTA margins. This has resulted in our EPS estimates for FY22 and FY23 increasing by 9% and 9.5% respectively. We also raise our target multiple from 35x FY23E EPS to 37x FY23E EPS leading to our 1-year target price increasing from Rs2,000 to Rs2,319. Reiterate BUY.

Source : Equity Bulls

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