CAMS

Q2 FY26 Performance & Strategic Outlook

Strong operating metrics, resilient margins, and long-term moats amid regulatory headwinds 🔹 Record Quarterly Revenue & Margin Recovery - CAMS posted its highest-ever quarterly revenue in Q2 FY26, reflecting healthy operating momentum. EBITDA margin rebounded to above 45%, up 90 bps sequentially. - Despite muted YoY numbers due to the pricing adjustment, profitability trends remain encouraging. 🔹 Mutual Fund AUM Growth & Market Leadership - Average MF AUM serviced rose 16% YoY to ₹52 lakh crore, in line with industry growth. - CAMS retained its dominant 68% market share in terms of AUM serviced. - Equity assets, which command higher fees, remained steady at 55% of total AUM. 🔹 Client Expansion & Visibility - Six AMCs onboarded in the last nine months, including Angelone, Unifi, and Jio Blackrock. - Three more asset managers are expected to go live soon, supporting future growth. 🔹 Non-MF Business Traction - Non-mutual fund revenue grew 15% YoY, contributing 14% of total revenue. - Segments include CAMSPAY, CRA for NPS, Bima Central, AIF/PMS servicing, and e-KYC. - Margins remain below 15% but are expected to improve with scale; upside from these platforms is not yet priced into valuations. 🔹 Regulatory Overhang & Yield Pressure - SEBI’s proposals to rationalize TER and phase out exit loads may impact AMC earnings. - CAMS, which earns over 80% from MF servicing, could face margin pressure as AMCs cut costs. 🔹 Defensible Moats & Operational Strength - CAMS’s platform is deeply embedded in MF operations, making replacement difficult. - Cash-rich balance sheet (₹789 crore), annuity-like revenues, and high operating leverage support resilience. - ROE has consistently averaged above 30% over the past five years. 🔹 Valuation & Investment View - Stock trades at 34x FY27 earnings, below its historical average of 42x and peak of 64x. - Current valuation reflects regulatory risks and potential equity market corrections.