CAMS –IPO View – (Leadership position in niche business with high entry barriers)

Issue Details

Price Band: Rs 1229 – 1230

Bid Lot: 12 shares

Issue Date: 21-Sept-20 to 23-Sept-20

Issue Size: Rs 2,244cr (entire OFS by NSE)

Post-issue market cap @ Rs1230: Rs6,000 crore

View: Market leader in niche MF RTA business, pan-India presence and robust financials.

• CAMS is the largest MF RTA in India with 70% market share (61% in FY15). It caters to four of the five largest MFs in India as well as nine of the 15 largest MFs based on AAUM as of July’20.

• Over FY17-20, CAMS Revenue/EBITDA/PAT grew at a CAGR of 14%/13%/12%.

• The balance sheet is lean with zero debt and negative working capital, thus resulting in healthy return ratios (FY20 RoE/RoCE at 35%/37%).

• The entire INR22bn IPO consists of only OFS of 18.2mn shares by NSE, paving way for listing on NSE platform in future

• At the higher end of the price band, the issue is valued at 35x FY20 P/E, which seems fully priced.

• We recommend Subscribe for Long Term to the IPO as CAMS enjoy first mover advantage along with leadership position, asset light business model and high entry barriers

• Risk: (1) Top 5 clients contribute 71% to its revenues, (2) technological disruption and (3) data security & privacy.

Financial (fig. in Crs)
YearRevenueEBITDAOPMPATNPMSharesFVEPS
201639114336.57%8421.48%4.8761017
201747218338.77%10822.88%4.8761022
201865025439.08%16024.62%4.8761033
201971126136.80%13018.28%4.8761026
202072130942%17323%4.8761035

:

CAMS IPO Tentative Date / Timetable
Bid/Offer Opens OnSep 21, 2020
Bid/Offer Closes OnSep 23, 2020
Finalisation of Basis of AllotmentSep 28, 2020
Initiation of RefundsSep 29, 2020
Credit of Shares to Demat AcctSep 30, 2020
IPO Shares Listing DateOct 1, 2020

Disclaimer: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here.

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