InvestorQ : What are the pros and cons in the CAMS Ltd business model, where the IPO is open?
Lavanya Subramanian made post

What are the pros and cons in the CAMS Ltd business model, where the IPO is open?

Answer
user profile image
Anamika Sodhani answered.
1 month ago


CAMS IPO is currently in progress and its business model largely depends on growth in AUM of mutual funds. The big advantage for CAMS is that it has close to 70% market share of average AUM as registrar. The woes at Karvy have helped CAMS consolidate better.

Out of the 15 large funds, 9 are with CAMS and that gives them an edge. It is also not a very capital guzzling business. However, the fee income is largely dependent on MF flows and that has been under pressure.

In Jun-20 CAMS saw revenues falling by 15% and that is a risk for the stock to live with. However, MFs do have a long term potential so it takes CAMS along. Valuations at 35X may be stiff.