After 12% slide, brokerages spot value in India’s mutual fund registry firm CAMs as yield concerns appear overdone and diversification strategy shows progress
The market has been unkind to Computer Age Management Services lately. Down 12% over three months, the stock that powers India’s booming mutual fund industry appeared to have lost favor. But two brokerages—Motilal Oswal and ICICI Securities—suggest in recent reports that the pessimism may be excessive.
At about Rs 679, CAMS trades below both firms’ targets: Motilal assigns a target of Rs 850 (25% potential upside), while ICICI estimates INR 790 (16% upside). The gap reveals a possible market overreaction: concerns about pricing pressure in the core business may have overshadowed operational progress happening across other divisions.
The Yield Reset Question
CAMS derives most of its revenue—85.5% in the December quarter—from registrar services to mutual funds. When fund houses compensate CAMS, they do so based on assets under management. Any pressure on these “yields” directly impacts financials.
The market had been anticipating challenges. New regulations on total expense ratios (TER) raised questions about whether asset managers might seek to renegotiate contracts downward. Motilal Oswal’s report identified this as a risk factor, estimating potential impact at Rs 200-250 million annually. Market pricing appeared to reflect these concerns.
However, the Q3 update provided clarity. “AMCs have not initiated discussions yet,” management indicated, according to Motilal. More significantly, ICICI Securities’ report notes that “the complete impact of yield repricing for a big client [is] now in base” and that “top 3 clients now have broadly similar pricing.”
Management now expects “stable yields for the next 12-18 months, with no major contract negotiation in this period,” per Motilal’s report. ICICI’s analysis suggests that “fundamentally, yield decline trajectory should have lower scope gradually with every downward reset.”
The quarterly numbers reflect this. MF revenue grew 3% year-on-year to INR 3.3 billion in Q3, incorporating earlier adjustments. ICICI Securities projects yields to moderate from 2.13 basis points in nine-month FY26 to 2.07/2 bps in FY27/28.
The Diversification Strategy
While yield concerns dominated attention, CAMS’ non-MF businesses posted 24% year-on-year growth to Rs 566 million in Q3, now representing 14.5% of total revenue.
The operational details show momentum across segments. “CAMS Alternatives posted its highest-ever quarterly revenue in 3QFY26,” Motilal’s report states, “backed by continued momentum in business acquisition, with 30 new mandates and overall AUM crossing Rs 3 trillion.” The Wealthserv platform crossed 250 mandates.
CAMSPay, the payments gateway business, reported 59% year-on-year growth. “UPI AutoPay mandate registration clocked 130,000 mandates/day in October 2025,” according to Motilal, while NBFC sector mandates increased 12% annually. The business added 22 new clients in Q3.
Insurance repository CAMSRep added 700,000 policies and 550,000 eIA (electronic insurance accounts), with over 40% market share noted in the report. The Bima Central platform recorded 2 million unique users with 173,000 transactions in the quarter.
CAMS KRA—the KYC registry business—”witnessed sequential as well as YoY growth in revenue despite a decline in incremental demat accounts,” aided by the NSE KRA migration, per Motilal’s analysis.
Management has provided guidance of 20-25% annual revenue growth in non-MF segments, targeting EBITDA margin improvement from 13% currently to 25-30% within 2-3 years. ICICI Securities models 17% revenue CAGR for non-MF through FY28, lifting its contribution to 15.4% of total revenue.
The Operating Track Record
ICICI Securities’ report highlights the historical performance: “Consistent FCF (~65% of EBITDA), RoE (~43% average RoE in last 3 years) and earnings CAGRs of 17.4%/22% over the last 3/5 years.”
The core MF business showed continued expansion. Assets under management grew 18% year-on-year to Rs 54.7 trillion, with CAMS maintaining approximately 68% market share. Equity AUM rose 19% to INR 30.4 trillion. Transaction volumes climbed 14% to 272.8 million, while investor folios expanded 18.5% to 107.8 million.
ICICI’s report notes equity AAUM growth of “47.4%/19.3% YoY in FY25/9MFY26,” reflecting the underlying industry trends that support the business.
Operating margins remained robust. EBITDA margins stood at 45.9% in Q3 (compared to 46.7% in the prior year quarter). Both brokerages project margin trajectory: Motilal anticipates improvement as non-MF businesses scale, while ICICI models 44.5%/45.5%/46.1% for FY26/27/28.
Following the stock’s recent correction, CAMS trades at approximately 27x estimated FY28 earnings. Both brokerages use 32x FY28 P/E for their target calculations.
ICICI Securities upgraded its rating from Add to Buy, citing the 12% price decline over three months as a factor. The report states the upgrade follows greater clarity on yield stability and progress in non-MF segments. Motilal Oswal maintains its Buy rating.
Both firms project earnings growth: Motilal expects revenue/EBITDA/PAT CAGR of 10%/11%/12% over FY25-28, while ICICI models PAT of INR 4.7/5.4/6.1 billion for FY26/27/28 (14% CAGR).
Key risks identified include potential monetization challenges in new initiatives and possible future TER-related yield adjustments.
