CAMS IPO : Subscribe or NOT?

The data has been compiled from various sources and might have small difference but overall theme is to subscribe or not — we will focus on that

CAMS– almost two decades of experience –is a technology-driven financial infrastructure and services provider to mutual funds and other financial institutions. Aggregate market share of approximately 70% based on mutual fund average assets under management (“AAUM”) managed by their clients and serviced by us

Offer purpose — 2258cr Complete offer for sale by promoters

Key Service domains – Mutual funds, AIF business, KYC registration, Insurance services business

Clients -SBI Mutual Fund, HDFC Mutual Fund, ICICI Prudential Mutual Fund, and Aditya Birla Sun Life Mutual Fund are serviced by CAMS

Revenues from Key Business— 85% ( mutual funds)

Risks —

Huge dependency on Mutual fund business with major revenue from it (more than 85%)

Significant disruptions in information technology systems can cause it a loss

Slow revenue growth in past few years

Risk of Regulators.

Pricing power can be a hurdle to grow earnings

Future

Long term growth seems reasonable and demand seems to increase in coming years with Indian Mutual fund industry set to grow

Almost all Major mutual funds are clients

Valuations

Expensive but considering almost duopoly, it can undergo time correction

Should we apply?

High chances of allotment. Less Risk taking people can avoid

Listing day can see (-8%) to 20% . Recommended to book profits if any on listing day

3+ year holding can give good returns even from this price if things workout well

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