Computer Age Management Services Ltd (CAMS) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, please stay connected. The call will begin shortly. Thank you.
Moderator: Ladies and gentlemen, good day and welcome to Computer Age Management Services Limited Q2 and H1 FY27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nikunj Seth from NUSG. Thank you and over to you, sir.
Nikunj Seth (NUSG): Thank you, Huda. Good morning everyone. Welcome to Q2 and H1 FY27 earnings conference call of Computer Age Management Services. MD and CEO, Mr. Ramcharan, CFO and Mr. Anish Kumar, Investor Relations. Before we proceed to the opening remarks, I would like to give a small disclaimer that this conference may contain certain forward-looking statements about the company which are based on beliefs, opinions, and expectations of the company as on date. These statements are not guarantees of future performance and involve risks and uncertainties. A detailed disclaimer has been published in the investor presentation. Now, I would like to hand over the conference to Mr. Anuj Kumar for his opening remarks. Thank you, and over to you, sir. Yeah, good morning, everyone and thanks, Nikunj.
Anuj Kumar (Computer Age Management Services Ltd): Thanks everyone for joining this 2Q FY27 earnings call of CAMS. The presentation would be with you now. I will take you through the initial highlights of the quarter and how the business transpired. Broadly operating revenue at the enterprise level grew 10% year-on-year to become Rs 115 crore. This is the first time we've crossed crossed the 400 crore mark. And in a quarter which wasn't very easy because you've seen the markets and you've seen trends in AUM, etc. I think this is a fairly cred- creditable and I'll get to the various components as I progress. On this 10% year-on-year revenue growth, EBITDA increased by 13.5% to almost Rs 191 crore. Do keep in mind that this 191 is after absorbing a large scale employee increment, which we had deferred from first quarter to second, so that cost incurred was incurred in the second quarter. Also the fact
Moderator: Ladies and gentlemen, the line for the management got disconnected. Just give me a moment while we reconnect them. Ladies and gentlemen, the management is back online. You may continue.
Anuj Kumar (Computer Age Management Services Ltd): Okay. Great. Sorry. Sorry about this disruption. I think there was a blip in the line. So, we were speaking about margins. EBITDA increased on this 10% revenue increase year-on-year. EBITDA increased 13.5%. This was after taking the cost of employee increments which happened in the second quarter. Also, there is a component of about Rs 4 crore which is and we will speak about that in detail which has cost incurred on the new platform which is not
Anuj Kumar (Computer Age Management Services Ltd): Slowly coming into the P&L, so this 91 191 has to be read in the backdrop of that. EBITDA margin expanded 140 basis points to 46%. Now, how I would characterize this entire thing is that typically in good quarters, you've had asset increases of 18%, 19%, 20% and even higher than that, and therefore, you expect baseline results to to kind of align to that kind of asset growth and that kind of revenue growth. This time, the asset growth was just north of 12%, so significantly lower than that, in line with the industry. However, producing this quality of results both on the revenue and the EBITDA side, I think is fairly creditable. So a lot of you continued to ask us questions on what will happen if it wasn't such a strong quarter. I think this is a great example of a quarter which did not see significant AUM growth in line with the past, but the financial results have been have vindicate the the how solid the model is. PAT on the back of, you know, this 140 base point expansion in EBITDA grew 14.5% year-on-year. So 10% revenue growth, 13.5% EBITDA growth, 14.5% PAT growth. That's really the summary of the quarter. And also I would say that three or four years back, when our revenue diversification outside of mutual funds was not as significant as what it is today, I think a lot of this financial gross contribution has been driven because of what's happened in the non-MF business. In the past trailing 12 quarters, in most of the quarters we've reported in excess of 20% annual growth in the non-MF business and we are confident this will continue to happen. The good news is that this is not a cash guzzling business. The margins continue to improve. So So overall, this business, the non-MF business, grew almost 22%. CAMSPay, the payment services, crossed 6% revenue contribution. This used to be about 3% two, two and a half years back, so fairly significant build-out there. Just kind of splitting this I have moved to the next chart on the MF and non-MF side, CAMS MF AUM, as I said, grew about 12.5%, got to about 58.5 lakh crore, 67% market share. But I think what is significant in this is that the equity AUM grew 15.5%, so ahead of industry, industry was 15.2. Why did this happen? If you reflect on the equity net sales for the last one year, even longer, but I would say just look at it over the last one year, our share in equity net sales is upwards of 70%. So that's driven the growth in equity MF AUM above industry. The net sales number of, you know, 70% of the industry net sales driven to an extent by SIP collection. So SIP collections, I am talking of the gross number not the net number. But in the quarter, SIP collection grew 16.5% year-on-year. This is against the industry 12.4% number. So again, you can look at it at a gross basis. Overall assets grew 12.1%, equity AUM grew 15.5% ahead of the industry. Within that SIP collections gross grew 16.5% against industry of 12.4, so significant you know significant lift over the industry. And the net sales number is 70% of the industry in the last one year. So all of this contributed to equity MF AUM increase ahead of the industry. Live SIPs and investor base, both of them grew in share and grew ahead of industry. So again, from a foundational metrics perspective, everything solid, everything positive in a quarter against baseline of, you know, high-teens growth. This was not even a teen MF AUM growth 12%, but we managed to grow every metric significantly, including PAT at 14.5. Some of the other trends which became visible. SIF, new product class, almost 12 of our AMCs have now launched SIFs. Overall AUM 20,000 crores. Still early days. We've kind of getting to about 1 lakh investors, but we believe that from a portfolio diversification perspective, this will become a hugely popular product. Also, GIFT City retail funds continue to scale. Five launches have happened, two more two to three more will happen in the current quarter. So the AUM crossed 1500 crore. I would again say early days, but a promising product allows the
Anuj Kumar (Computer Age Management Services Ltd): upward. A lot of this is outbound domestic investors investing in FOFs or ETFs overseas through the Gift City architecture. So, that's done well. InCred AMC appointed CAMS as its MF RTA, fairly significant win for us. So, we get with this from a client count perspective to 32 out of 64 licensed AMCs. You know that at one time, well our market share has been high 60s, early 70s, the count of AMCs was smaller. I think in the last two, 2.5 years, we've flattened that completely. So, 32 out of 64 licensed AMCs. And if you reflect on the logos in the last few to four years, we continue to believe that we won everything that we wanted to. ASK Investments and Carnelian, these two went live with the maiden funds during the quarter. And Angel One and Navi are expected to go live in the coming quarter, which is 3Q. So, that will kind of continue from new AMC and new AMC MFA and AUM build-out perspective will continue to give support as much as we need from a new logo perspective. On the beyond mutual funds, non-MF revenue contribution grew to just short of 16%, 150 basis points up. But I would say that underneath the hood, some very strong trends. CAMSPay grew in excess of 50% year-on-year, 13% quarter-on-quarter. Both the base, you know, recurring payments through NACH, e-NACH and UPI AutoPay and the newly you know, grown and growing cards business, both have done very well. Significant client additions, so we don't believe that any of this is either one-time or will stay this way, will continue to scale. Alternatives again, great story. I've been telling you that despite the significant depth of what competitors are doing, 22% year-on-year revenue growth, AUM just crossed 3.3 lakh crore, 50 plus new mandates, 15 new marquee relationships. So, you will see that a lot of these businesses Pay especially doesn't have a lot to do now with the capital markets. A lot of it is diversified as non-capital market revenue. Alternatives is capital markets, but a lot of it is derived from non-MF AMCs. Those are not the AMCs with whom we do MF work. And then when you look at KRA, three years back, we literally had almost 100% of the revenue derived from mutual funds. Today, five of the top 10 broking houses in India are actively doing business with us. We may not have 50 or 60% market share with them, we may have 10 to 25%, but it's a very nice break-in. And the reason we've shown you quarter-on-quarter revenue growth because in the year-on-year numbers, there was that large fee remission of 20% plus that we've taken in the first quarter. So, we believe Q-on-Q is a relevant number. Again, nothing one-off, nothing one-time, and this is just native growth, and again given the fact that capital markets have had their share of headwinds, I think all of this is fairly creditable. I will get to repository. We crossed 15 million, 1.5 crore demat policies. The important thing is that Bima Central now has a module for brokers. So, you can get to the CAMs app and the CAMs website the CAMs rep website and do your work, but you could also get to these brokers who are active sellers of insurance and they are now driving two things. They're driving they're driving policies in demat. They're driving those consumers of theirs to now start doing transactions on Bima Central. Of course, it's like a white-labeled solution on their apps and their websites. So, that's good. We expect that trend to continue deepening. Also, while it's early days, I don't want to start calling out the impact of new, potentially new regulation etc. but you guys are aware that there is directionally a possibility that this industry may go heavily into a digital format. It will continue to remain a sold product, a significantly sold product, not a sought product. But digital interventions, do-it-yourself etc. will become is likely to become a lot more deeper and abiding and we believe we're in the best place to take this journey forward for the industry, the single player which has this significant servicing layer on top. So, again like I said early days all of this story should likely unravel itself in the next two or three quarters. We'll keep you posted. Account Aggregator grew 19% again on a small base. But in the analytics use case, you know that for one of the largest banks in India, we've deployed the PFM module for their for their banking app and they are showing now, you know, financial
Anuj Kumar (Computer Age Management Services Ltd): and financial scores. This will get adopted by many other players over a period of time. Also, in the account aggregator market, although it remains a small business, a new pricing model remunerating FIPs, etc. is about to come in, you may have read something about it. We will talk about this in more detail perhaps in the ensuing months when something solid has happened. But I think both in AA and in CAM in insurance, there are possibilities that some of these regulatory winds may shape a more meaningful future accruals, but we will we'll keep keeping you posted on how that works. And then, ConsentPRO, we've been talking about this product, you may have seen some of our PR, you know, it's a pioneering DPDP implementation. We're focusing on the BFSI segment, under implementation with 20 clients. We believe, of course, this has to scale significantly, maybe 10 to 20x from these 20 clients to become meaningful in our, you know, in our product and business armory. But a very good start. A lot of mutual funds, broking houses, NBFCs, those kind of people have opted. Almost half of them would be mutual funds, I would say, the other half are other entities. But it's a great start. We went into this market seriously maybe in the month of April, May. So, building it out, it's a great capability to have on our side as we move forward. On the technology side, I think some of the metrics are visible to you. But I will just say that the progress is very good and very strong. And some of this, I will not claim you're seeing it in the financial results already. A bit of it you are, but in the next three to four quarters, every quarter starting from this quarter, you will see those things happen. So, from a modernization, new launch perspective, FundsNet is really the face of the of the RTA utility because this is how the transactions, you know, millions of transactions every day come in. This has now gone live. We're planning to sunset the legacy utility by March, April. This will spread significant productivity in the organization. It will spread significant productivity, more importantly, in the MF industry where time and effort taken by people, by brokers, by aggregators, by platforms, by AMCs, their branches, their operations teams, will significantly reduce. So, it is productivity enhancing for the entire industry and, of course, for CAMS. On the on the form reading data reading, I think the use cases are already deployed. We've spoken a little about it. You've seen some impact on our head count. We've continued to grow on falling headcount this year after April. You will continue to see that trend as we progress. We're also seeing rub-off benefits in lower complaints, etc. AI's ability to read written characters is very good. Of course, we've not taken out the maker yet. We've only taken out the checker in some cases. But after 7 or 8 months of having this in production, after March, April, we are very convinced that this is the way to go. So, we will continue deepening this. You may have read about CAMSLens. Some of you, I know, have been in our closed user group, etc., with us, testing this out. NISM adopted this as the AI-powered training partner for compliance for themselves and for their students. So, it becomes part of their pedagogy platform, which is good news for us. And again, from a data reporting, new platforms for GIFT City, you know GIFT City platforms are complex because the way you do KYC, the way money gets transferred, there's Forex involved. All of these things and the quality of APIs you build are very different. All of this is now getting done through the new utility. We also built out KYC Hub. Some of you may have seen this in the GFF, which is our new eKYC platform. Again, finding a lot of adoption across the industry. So, very strong progress on the new platform side. I I just think that it's probably 30% done. It's probably about in all avatars 30% done. But the the impact is already visible to us. I think the headcount impact is in the financials. A lot of that will become, you know, stronger and stronger. But from a performance, quality of integration, quality of tech in the market, time taken to conclude anything, all of those things, time taken to build a new utility or a new app, time to onboard customers, curate or cure, you know, faulty transactions, all of that is seeing a significant lift. I will pause here now and hand over to Ramcharan to take you through the financials.
Ramcharan (Computer Age Management Services Ltd): Thanks, Anuj. Anuj has already gone through the financial highlights.
Ramcharan (Computer Age Management Services Ltd): I'd just like to reiterate a few points especially with regard to AUM to growth and the question on yields. I think it has been a reasonably stable quarter with regard to yields. I think we have always guided that, you know, you will see some quarters you will see three to three and a half percent drop in yields. But I think quarter-on-quarter we have done much better. The drop in yield is less than a percentage. Year-on-year due to a combination of factors, one is obviously the scale based pricing because the assets have grown almost 7 lakh crore on a year-on-year basis, and also because of the mix, which is that you do have less of debt and more of passives in this mix. Although, both are almost like similar number in terms of absolute AUM. So, because of that you will see, and it's well within the range that we have predicted, which is at around, which is the yield drops around 3% year-on-year and less than a percentage on quarter-on-quarter basis. No big pricing corrections have happened. And as we have said, there are some negotiations happening, couple have been closed, couple are in progress. So, this is there is no big price correction that's happened, nor do we expect something large to happen in the next few quarters. In terms of the non-MF growth, I think as Anuj mentioned, it's been an excellent quarter. 21% year-on-year growth, 11% quarter-on-quarter growth. CAMSPay has done very well and we have kind of the and KRA has bounced back. KRA has bounced back in terms of its revenue growth. So, this is kind of very beneficial from the overall non-mutual fund profitability perspective. We had said that, you know, we will try to exit the year with close to 20% profitability. Happy to say that even in the last quarter, given the mix of growth that we have seen in non-mutual fund business, the non-mutual fund profitability is upwards of 18%, right? So, which means it's a very good development from a profitability perspective. So, are not only are we scaling non-mutual fund businesses, we are also scaling it profitably. And you've seen also from expense growth perspective, we had guided in the initial part of the year that, you know, we'll try to keep it less than 10%. Happy to say again that the expense growth on a year-on-year basis has been little more than 7%. And as Anuj pointed out, this is the quarter in which we have also given the annual appraisal. So, that is an 8.5 crore impact, which is almost a 2% impact. And in spite of that, our expense growth even on a quarter-on-quarter basis is only 7%. So, well on track, aided by productivity improvements and some, some improvements happening because of deployment of our re-architectured platform and AI. And as Anuj mentioned, this is going to be a sustained kind of movement. It's not a one-off thing that we are seeing. So, expenses well under control. I think yields are broadly in line with what we had predicted. We see no big strain on the yields going forward also. And the non-mutual fund growth diversification well on track with a 20% plus growth. We are at 16% almost non-mutual fund percent proportion of sales. And as we said, our target is to get to 20% within the next couple of years. From a cash position, we entered the quarter with a very comfortable 900 crore cash position. This is after paying 160 crores of dividend during the quarter for the earlier two quarters. And we have also declared a 3.25 rupees dividend as an interim dividend. Overall, I think very strong cost control measures. We have rationalized a lot of things, aided by technology productivity. The non-mutual fund growth back on track in terms of KRA and doing very well in terms of payments and stable in terms of a few other businesses, AIF doing very well in terms of growth. And, and we're looking forward to this growth in non-mutual fund sustaining, as Anuj said. None of it is one-time, nor are we expecting some you know, some slowdown in growth in our major non-mutual fund businesses. So, that's the summary of the financials. And I will leave it to the moderator to open it up for questioning.
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