The optionality provided by various ‘other’ businesses is the main attraction in CAMS. I expect the core MF business to grow at around 8 % at the most. If there is a broader bull run, it will grow faster. The company has said they want to take the revenue outside of mutual funds to around 20 % of company revenues. This year the non-MF share of the business crossed 10 % for the first time, growing 9.3 % YoY for the year.
The Insurance repository now holds 5 million e-policies, a growth of 33 % over end-FY22. As of last quarter, CAMS apparently had a 33 % market share of this business. But the insurance repository earned less than a crore last quarter apparently. The main trigger for insurance will be the expected regulatory push which everyone is waiting for. There are apparently 40 to 50 crore policies to be dematerialized, and this will be a Rs.150-200 crore size industry as a conservative estimate. Here CAMS can charge for policy conversion and an AMC. Interestingly, Mr. Anuj Kumar said in the concall it may be difficult to charge for transactions, looking at what we see elsewhere in the financial digital ecosystem. This view is quite a dampener, as transactions were really the one supposed to be the big money spinner. (Conversion will be a one-time revenue and AMC will have its limitations. Transactions will be recurring and scalable).
The KRA business has more than 10 million records in its repository but does not earn any direct revenues apparently (at least not worth mentioning). Here competition has increased as more KRAs entered the market. BSE launched its KRA service from October last year. The e-NPS revenues were up 50 % but its size is quite small in absolute terms.
The Account Aggregator business added 20 plus sign ups, taking the total customer count to 79. The company bought out Think360.ai which can process Android SMS data and bank statements to give consumer insights. But the revenue model for AA is yet to properly evolve.
The Payments aggregator license has been received in February 23, but this is also a very competitive field, and I am doubtful how profitable this would be in the long run. The company says it has shown 27 % growth in revenues and “unprecedented” merchant additions.
The AIF business is the one which is doing the best, apparently brought in 2.9 % of the company revenues, which comes to around Rs.28 crore.
All the subsidiaries put together have brought in Rs.43 crore of revenue for the year FY2023, this is Rs.3 crore less than the Rs.46 crore brought in last year in FY2022. At current price the company trades at a market cap of Rs.10,000 crore and P/E of 36.
Until the insurance regulation kicks in, or a broader bull run, not much price action can be expected.
(Disc: Holding)
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