CAMS shines on upbeat mutual fund prospects, but risks lurk
Subscribe to enjoy similar stories. For equity investors optimistic about the mutual fund industry's prospects but uncertain which asset management company (AMC) to back, indirect plays like registrar and transfer agents (RTA) offer a viable alternative. A case in point is industry leader Computer Age Management Services Ltd (CAMS), whose shares have surged 80% over the past year.
CAMS serves 10 of the top 15 AMCs and held a commanding 68% market share of the mutual fund industry’s ₹45 trillion assets under management (AUM) as of August. The company recently met analysts and shared its strategies beyond the usual business operations, even as the plans are closely linked to its existing RTA business. For example, CAMS is well positioned to cater to any likely shift in favour of alternative investment funds (AIF), which are gaining traction alongside mutual funds and portfolio management services (PMS).
Read this | How CAMS is tackling SIP bounces and enhancing investor experience Similarly, CAMSPay, the company’s payment aggregator, streamlines transactions for mutual fund investments. Meanwhile, CAMS KRA, its KYC registration arm, has introduced the industry's fastest 10-minute KYC process. AIF, CAMSPay, and CAMS KRA are each expected to contribute around ₹50 crore to FY25 revenues.
However, these new initiatives are unlikely to significantly reduce the reliance on mutual fund (MF) revenues in the near term. In FY24, MF accounted for 87% of CAMS' total revenue of ₹1,137 crore, and even by FY27, it is projected to remain substantial at around 80%. Over the three years leading to FY24, mutual fund assets grew at a 19% CAGR, compared to an 11% increase in bank deposits.
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