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Motilal Oswal Report
Empirically, Computer Age Management Services Ltd. has traded at a premium to listed asset management services in terms of one-year forward price/earning. Due to the outperformance by AMC stocks, the valuation gap between CAMS and AMC stocks has narrowed. The premium for CAMS is well deserved, given:
the duopoly nature of the industry and high-entry barriers,
relatively low risk of a market share loss, and
higher customer ownership as compared to AMCs.
Structural tailwinds in the mutual fund industry shall support absolute growth in MF revenue for CAMS. With favorable macro triggers and right investments, the revenue contribution of non-MF businesses for CAMS is expected to increase in the next three to five years.
We broadly maintain our estimates and a Buy rating on the stock with a target price of Rs 4,200, based on 40 times FY26E EPS.
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