CAMS Initial (Kotak) 2

Company Report
Computer Age Management Services (CAMS) ADD

Diversified Financials
March 29, 2021
INITIATING COVERAGE
Sector view: Attractive
Key pick among MF plays. CAMS’ prospects are directly linked to those of India’s MF
industry, with a market share of ~70% in MF AAUM. As a dominant operator in a CMP (`): 1,768
duopoly RTA market, its breadth offers protection against market share volatility. We do Fair Value (`): 1,850
note that its revenue concentration among top AMCs limits its pricing power and
compresses yields. We expect its improving productivity and unit economies to mitigate BSE-30: 49,009
slower MF AUM growth to drive 14% EPS CAGR over FY2021-24E. We initiate coverage
with an ADD rating and DCF-based Fair Value of Rs1,850.
Initiate with ADD rating: Leading MF play

We initiate coverage on CAMS with an ADD rating and Fair Value of Rs1,850 (5% upside).
CAMS has a dominant position in India’s registrar and transfer agent (RTA) market duopoly,
which reduces risks of market share movements. This makes it one of the best MF plays and INSIDE
provides visibility for its earnings. We continue to be cautious about medium-term challenges to Duopoly market;
India’s mutual fund industry, which will likely pressure CAMS’ revenues, driving (moderate) 14% pricing power
EPS CAGR during FY2021-24E. skewed towards
AMCs ........ pg09
CAMS: Lion’s share in the RTA duopoly
CAMS’ model is intrinsically directly linked to Indian MF AAUMs, serving about 70% of Indian MF Largest MF RTA;
AUMs—this makes it broadly agnostic to market share movements among AMCs. Its MF revenues
focus on product
(87% of total in FY2020), although mostly linked to served AUMs, have lagged asset growth due
diversification
to persistent yield compression. This is a result of the high revenue concentration from top clients
.................. pg21
(~36% from top-2 AMCs and ~67% from top-5), which limits its pricing power vis-a-vis AMCs.
Along with its subsidiaries, CAMS provides several value-added services to mutual funds, insurance
companies and AIFs as well as related stakeholders like distributors and investors. Its business Yield pressure and
proposition is underscored by wide distribution, diverse product bouquet, domain expertise and slower MF AAUM
proprietary software and technology platforms. growth to pressure
earnings ..... pg33
Improving productivity to mitigate yield pressure and slower AUM growth
CAMS’ strong profitability (40-44% RoEs over FY2021-24E) is supported by low capital
requirements with inherently strong operating leverage of the RTA business (EBITDA margins of
41.4-43% during FY2021-24E). Moderation in broad AUM growth (16% CAGR over FY2022-24E Nischint Chawathe
compared to 23% over FY2015-20) and compression in yields (2.45 bps in FY2024E from 3 bps in
FY2020; 4.5 bps in FY2015) will likely constrain revenue growth to 12% CAGR over FY2021-24E.
M B Mahesh, CFA
We expect its strong focus on expense management and consistent productivity improvements to
boost PAT growth to 15% CAGR during the period, although CAMS’ share of the non-MF
business remains muted at ~10% of revenue. Dipanjan Ghosh
Risks: Excessive yield compression, concentration, adverse regulation, operating risks

Abhijeet Sakhare
Key risks for CAMS are: (1) faster-than-expected yield compression due to brisk digital adoption or
otherwise, (2) lower negotiating power due to high client concentration and (3) operating risks— Ashlesh Sonje
including cyber-attacks. Additionally, it could face risks endemic to the MF like weak financial
savings, shift to passives, volatility in capital markets and adverse regulations.
Company data and valuation summary
Company data Stock data High Low Price performance 1M 3M 12M

RATING: ADD 52-week range (Rs) 2,023 1,260 Absolute (%) (3) 4 NA
Rel to BSE-30 (%) (3) (0) NA
CMP (Rs) Price at close of: 26/3/2021
1,768 Capitalization Forecast/ valuation 2021E 2022E 2023E
Market cap (Rs bn) 86 EPS (Rs) 41.8 48.1 55.0
Promoter (%) 31 P/E (X) 42.2 36.7 32.2
Free float (%) 69 P/B (X) 17.6 14.8 12.6
Shares outstanding (# mn) 49 RoE 39.7 43.9 42.4
[email protected]
Source: Bloomberg, Company, Kotak Institutional Equities estimates Contact: +91 22 6218 6427
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Computer Age Management Services Diversified Financials
BUSINESS OVERVIEW: COMPUTER AGE MANAGEMENT SERVICES

Exhibit 1: Key financial metrics for CAMS
March fiscal year-ends, 2017-24E
Equity Data
MF MF oriented MF Revenue Profit processing Dividend
AAUM AAUM handled to from after EPS charges/ Cost-to- EBITDA PBT payout
handled yoy overall AAUM operations tax EPS yoy BVPS PER PBR DPS ROE MF AAUM income margin margin ratio
(Rs tn) (%) (%) (Rs mn) (Rs mn) (Rs) (%) (Rs) (X) (X) (Rs) (%) (bps) (%) (%) (%) (%)
2017 10 30 28 4,783 1,235 25 NA 85 69.8 20.9 12 NA 3.7 62.4 40.9 37.6 58.2
2018 14 34 36 6,415 1,459 30 18.2 91 59.1 19.4 20 34.1 3.6 65.6 39.1 34.4 79.8
2019 16 15 39 6,936 1,304 27 (10.6) 91 66.1 19.5 22 29.5 3.4 71.8 33.6 28.2 101.3
2020 18 15 37 6,996 1,734 36 32.9 111 49.7 16.0 12 35.4 3.0 65.2 39.7 34.8 41.3
2021E 20 11 35 6,984 2,040 42 17.7 100 42.2 17.6 52 39.7 2.9 62.6 41.9 37.4 125.0
2022E 25 24 37 8,181 2,354 48 14.9 119 36.7 14.8 31 43.9 2.7 62.3 41.4 37.7 65.0
2023E 29 15 37 8,983 2,699 55 14.3 141 32.2 12.6 36 42.4 2.6 61.0 42.1 39.0 65.0
2024E 33 16 37 9,809 3,063 62 13.1 164 28.4 10.8 40 40.8 2.5 59.7 43.0 40.3 65.0
Notes:
(1) All ratios are annualized.
(2) Profit after tax is post-minority interest.
(3) ROE: Profit after tax post-minority interest/average of period-ending shareholders' funds pre-minority interest.
(4) EBITDA margin: (Operational revenue-employee expenses-operating expenses-other expenses)/(operational revenues)*100.
(5) Cost-to-income: Overall expenses including depreciation and amortization expense and finance cost/total income including other income.
Source: Company, Kotak Institutional Equities estimates
Exhibit 2: CAMS – financial highlights

2017 2018 2019 2020 2021E 2022E 2023E 2024E

Key growth rates (%)
Revenue from operations NA 34.1 8.1 0.9 (0.2) 17.1 9.8 9.2
Data processing fees NA 30.2 8.4 3.4 4.4 16.5 10.8 10.0
Overall expenses NA 37.6 18.5 (7.9) (2.8) 14.6 8.5 7.3
EBITDA (excluding other income) NA 28.3 (7.0) 19.0 5.3 15.8 11.6 11.5
Profit after tax post minority interest NA 18.2 (10.6) 32.9 17.7 15.4 14.7 13.5
Growth in overall MF AAUM serviced 29.8 33.7 15.1 14.6 10.5 24.3 15.5 16.3
Key ratios
Share of equity-oriented MF AAUM serviced (%) 28.4 35.5 39.3 37.0 34.5 36.5 36.8 37.0
Data processing fees to MF AAUM (bps) 3.7 3.6 3.4 3.0 2.9 2.7 2.6 2.5
Overall MF revenues to MF AAUM serviced (bps) NA NA 3.8 3.4 3.1 3.0 2.8 2.6
Cost-to-income (%) 62.4 65.6 71.8 65.2 62.6 62.3 61.0 59.7
EBITDA margin (% of revenues) 40.9 39.1 33.6 39.7 41.9 41.4 42.1 43.0
ROE to shareholders of CAMS NA 34.1 29.5 35.4 39.7 43.9 42.4 40.8
Income statement (Rs mn)
Revenue from operations 4,783 6,415 6,936 6,996 6,984 8,181 8,983 9,809
RTA services 4,751 6,365 6,839 6,910 6,932 8,108 8,899 9,713
Software license fee, development and other services 32 50 97 86 52 73 84 96
Other income 243 163 182 217 317 223 329 408
Total income 5,026 6,578 7,118 7,213 7,301 8,404 9,312 10,217
Overall expenses (3,134) (4,312) (5,109) (4,706) (4,572) (5,239) (5,683) (6,099)
EBITDA excluding other income 1,955 2,508 2,334 2,778 2,927 3,389 3,781 4,215
Profit before tax 1,892 2,266 2,009 2,508 2,729 3,165 3,629 4,118
Tax (650) (803) (700) (773) (688) (810) (929) (1,054)
Profit after tax 1,242 1,463 1,309 1,735 2,041 2,355 2,700 3,064
Profit after tax post-minority interest 1,235 1,459 1,304 1,734 2,040 2,354 2,699 3,063
Balance sheet (Rs mn)
Investment 2,223 2,182 2,325 3,061 3,272 4,164 5,250 6,409
Other assets 3,626 4,797 5,038 4,964 5,219 5,533 5,793 6,131
Net assets 5,848 6,979 7,363 8,025 8,491 9,696 11,043 12,540
Total liabilities 1,640 2,466 2,869 2,627 3,598 3,857 4,137 4,439
Equity share capital 488 488 488 488 488 489 491 493
Reserves and surplus 3,639 3,948 3,925 4,911 4,400 5,345 6,410 7,603
Shareholders' funds 4,127 4,435 4,413 5,398 4,888 5,834 6,901 8,096
Minority interest 82 77 82 — 5 5 5 5
AAUM details (Rs bn)
MF AAUM handled 10,294 13,759 15,841 18,150 20,059 24,924 28,784 33,469
Equity-oriented MF AAUM handled 2,921 4,885 6,233 6,707 6,920 9,097 10,578 12,383
Cah flow analysis (Rs mn)
Operating cash flows (excluding WC changes) 1,942 1,611 2,292 1,840 2,630 2,898 3,299 3,712
Changes in working capital/other adjustments 17 24 (411) 49 10 (13) (17) (21)
Capital expenditure (1,016) (428) (351) (151) 334 (393) (78) (184)
Free cash flow 942 1,207 1,529 1,737 2,974 2,492 3,204 3,507
KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

Diversified Financials Computer Age Management Services
INITIATE WITH ADD: KEY PICK AMONG MF PLAYS

We initiate coverage on CAMS with an ADD rating and FV of Rs1,850 (33.7X FY2023E PER). Our business view
is underpinned by CAMS’ dominant position in the duopoly RTA industry (~70% market share in overall MF
AUMs in India) and high entry barriers. These factors reduce the risk from vagaries in market share
movements and provide more visibility to earnings over AMCs. We do remain watchful of medium-term
challenges to the Indian mutual fund industry (lower inflows, shift to ETFs), which will likely continue to
pressure CAMS’ yields and constrain EPS to 14% CAGR during FY2021-24E.
Initiate with ADD

We initiate coverage on CAMS (Computer Age Management Services) with an ADD rating
and DCF-based FV of Rs1, 850, i.e. 33.7X March 2023E EPS (Exhibit 3). We assign a lower
cost of equity in our DCF-based model for CAMS compared to AMCs owing to relatively
lower sensitivity to market share movements in MF AUMs. The stock is close to full valuation
which constrains our rating. We remain cautious about industry headwinds pressuring
CAMS revenues.
Moderate medium-term growth for the MF industry

A significant portion of the RTAs’ income is linked to MF AUMs. The MF business drove ~87%
of CAMS’ revenues in FY2020 and FY2019. We expect the MF industry to deliver 15% AUM
CAGR during FY2021-31E. Meanwhile, we expect low-yielding passive funds to gain traction
over the medium term (increase in share of ETFs to 22% by FY2031E from ~7% in FY2020),
gaining incremental flow share from the active fund management industry as the latter
struggles to outperform indices. This will in turn likely pressure yields of the MF business,
driving 11% revenue growth for MFs and 10% CAGR for RTAs (discussed later in the report).
Duopoly structure helps while yields head south

CAMS has reported gradual compression in commission yields over the years–calculated
yields have moderated to 3 bps in FY2020 from 6.4 bps in FY2009 and around 4.5 bps in
FY2015. We are building in a further compression to 2.45 bps by FY2024E.
A significant proportion of CAMS’ revenue is linked to MF AUMs managed by the company.

CAMS’ agreements with MFs follow a tiered structure, thus yields are formulated to decline
as AUMs increase over time. Additionally, yields may be renegotiated downwards bilaterally.
We believe MFs will resort to yield renegotiation if and when they face significant revenue
pressure. Notably, most MFs renegotiated yields down after the TER cuts in the past year.
We believe that further headwinds to the MF industry will prompt MFs to further
renegotiate yields.
The current duopolistic structure of the industry helps CAMS during this renegotiation.
However, the MF industry in general is highly polarized as well with the top 13 players
driving ~90% of AUMs (as of 3QFY21). CAMS’ top two clients drive ~35% of its revenues
while top 5 clients drove 67% of its total revenues.
Improving productivity to cushion yield compression

We expect CAMS’ PAT growth to moderate to ~15% CAGR over FY2021-24E from ~17%
CAGR over FY2015-20 on the back of slower revenue growth despite adjusting for higher
business due to the acquisition of Franklin Templeton’s MF RTA business (~2.5-3% of overall
MF AUMs in India).
Slower MF AAUM growth for the industry (~16% CAGR over FY2022-24E compared to 19%
CAGR over FY2015-20) and yield compression (impact of tiered fee structure and rise in low-
yielding ETFs although partially offset by increasing share of equity-oriented funds) will likely
drive moderation in revenue growth to ~10% CAGR over FY2022-24E (up 17% yoy in
FY2022E due to the low base of FY2021E and acquisition of Franklin Templeton’s RTA
business) compared to ~13% CAGR over FY2015-20 (Exhibit 4).
4 KOTAK INSTITUTIONAL EQUITIES RESEARCH

We expect cost ratios to improve on the back of stringent cost control, process automation,
focus on increasing productivity, branch rationalization and a flexible employee model. We
expect cost-to-income to decline ~290 bps over FY2021-24E to 59.7%, thereby driving
marginal increase in EBITDA margins to 43% in FY2024E from 41.9% in FY2021E (39.7% in
FY2020 and 40.9% in FY2017).
Our DCF implies 33.7X PER March 2023E

We validate our multiple-based Fair Value target with a DCF-based FV calculation to arrive at
a Fair Value of Rs1,850 for March 2023E. Our DCF already builds in aggressive assumptions,
viz. (1) strong 15% AAUM CAGR over FY2021-31E, tapering down to 12% AAUM CAGR
over FY2031-43E, (2) EBIT ratio (% of AAUM) of 110-118 bps over FY2021-25E moderating
to 94-107 bps over FY2026-30E and further squeezing to 63-91 bps over FY2031-43E as an
interplay of compression in revenue yields (this has already declined to 2.45 bps in FY2024E
from 3 bps in FY2020) even as EBITDA margin remains strong (43% in FY2024E versus 39.7%
in FY2020) and (3) WACC of 11.8%; we bake in lower WACC compared to AMCs (WACC
for HDFC AMC at 12.8%) as the company is relatively shielded from movements in market
share and is a dominant player in a duopoly with high barriers to entry providing stability to
earnings despite near-term headwinds of yield compression.
Exhibit 3: We value CAMS at Rs1,850/share March 2023E

DCF-based FV calculation for CAMS, March fiscal year-ends, 2020-43E
2020 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E 2034E 2035E 2036E 2037E 2038E 2039E 2040E 2041E 2042E 2043E
AAUM (Rs tn) 18 20 25 29 33 39 44 51 58 66 75 85 96 108 121 136 153 171 191 213 237 264 292 324
YoY (%) 14.6 10.5 24.3 15.5 16.3 15.1 14.8 14.5 14.2 13.9 13.6 13.3 13.1 12.8 12.6 12.3 12.1 11.9 11.7 11.5 11.3 11.1 11.0 10.8
EBIT (Rs mn) 2,288 2,332 2,940 3,298 3,708 4,228 4,708 5,225 5,776 6,363 6,983 7,679 8,419 9,200 10,022 10,880 11,853 12,879 13,956 15,083 16,254 17,602 19,019 20,502
YoY (%) 25 2 26 12 12 14 11 11 11 10 10 10 10 9 9 9 9 9 8 8 8 8 8 8
EBIT/AAUM (bps) 1.26 1.16 1.18 1.15 1.11 1.10 1.07 1.03 1.00 0.97 0.94 0.91 0.88 0.85 0.83 0.80 0.78 0.75 0.73 0.71 0.69 0.67 0.65 0.63
EBIT*(1-tax) (Rs mn) 1,582 1,744 2,186 2,452 2,758 3,145 3,502 3,886 4,296 4,732 5,193 5,711 6,261 6,843 7,453 8,092 8,815 9,578 10,380 11,218 12,089 13,091 14,145 15,248
EBIT*(1-tax) yoy (%) 10 25 12 12 14 11 11 11 10 10 10 10 9 9 9 9 9 8 8 8 8 8 8
Tax rate (%) 31 25 26 26 26 26 26 26 26 26 26 26 26 26 26 26 26 26 26 26 26 26 26 26
Depreciation expense (Rs mn) (485) (434) (446) (480) (503) (532) (547) (565) (585) (608) (635) (666) (700) (739) (783) (833) (889) (951) (1,020) (1,097) (1,182) (1,277) (1,381) (1,496)
Changes in working capital (Rs mn) 172 (0) (23) (27) (31) (300) (23) (26) (29) (32) (36) (40) (44) (49) (54) (60) (66) (73) (80) (88) (96) (106) (115) (126)
Capex (151) 334 (393) (78) (184) (216) (248) (284) (325) (370) (421) (478) (541) (610) (688) (773) (868) (972) (1,086) (1,212) (1,350) (1,502) (1,668) (1,849)
Free cash flow (Rs mn) 2,088 2,512 2,216 2,828 3,046 3,161 3,778 4,140 4,527 4,938 5,372 5,860 6,377 6,922 7,495 8,092 8,770 9,485 10,233 11,014 11,824 12,761 13,743 14,770
Years discounted 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Discounting factor 0.89 0.80 0.72 0.64 0.57 0.51 0.46 0.41 0.37 0.33 0.29 0.26 0.24 0.21 0.19 0.17 0.15 0.14 0.12 0.11
Discounted cash flow (Rs mn) 2,725 2,530 2,706 2,654 2,596 2,534 2,467 2,408 2,344 2,277 2,206 2,131 2,067 2,000 1,931 1,860 1,786 1,725 1,662 1,598
38
DCF as on 31-Mar-23 3,749 3,069 3,399 3,749 4,114 4,493 4,881 5,343 5,824 6,322 6,831 7,346 7,990 8,662 9,357 10,073 10,802 11,766 12,786 13,863
Valuation of CAMS 702 (92) (378) (392) (413) (445) (490) (517) (553) (601) (664) (745) (780) (823) (876) (942) (1,022) (994) (957) (906)
Risk free rate (%) 7.0
Risk premium (%) 5.0 WACC (%)
Beta (X) 1.0 1,850 9 10 11 12 13 14 15 16
Cost of equity (%) 12 6.0 3,174 2,361 1,877 1,626 1,331 1,164 1,035 933
Terminal growth
WACC (%) 12 6.5 3,564 2,536 1,969 1,687 1,364 1,185 1,049 942
rate (%)
Terminal growth rate (%) 7.5 7.0 4,148 2,770 2,083 1,760 1,402 1,208 1,064 953
Sum of free cash flow (Rs mn) 44,208 7.5 5,121 3,097 2,231 1,850 1,446 1,236 1,082 965
Terminal value (Rs mn) 40,424 8.0 7,068 3,588 2,428 1,964 1,500 1,268 1,102 978
Enterprise value (Rs mn) 84,633 8.5 12,909 4,406 2,703 2,113 1,565 1,305 1,125 993
Equity value (Rs mn) 84,633
Cash on balance sheet (Rs mn) 6,204
Enterprise value (Rs mn) 90,837
No. of shares (mn) 49
Equity value per share (Rs) 1,850
Calculation of terminal value
WACC used (%) 11.8
Terminal growth rate 7.5
Terminal value calculation (Rs mn)
Cash flow in terminal year 14,770
Terminal value 373,584
Discount factor 0.11
Discounted value 40,424

Exhibit 4: Slower MF AAUM growth and yield compression to put pressure on revenues for CAMS
CAMS' revenues, MF AAUM and yields, March fiscal year-ends, 2018-31E
Revenues yoy (LHS) MF AAUM yoy (LHS) Calculated yields (RHS)

(%) (bps)
40 4.6 5
4.3
34 3.8
30 3.5 4
3.3
3.1
2.9 2.8
20 2.7 2.6 3
2.5 2.3 2.2 2.1
17
10 2
11
10 9 10 9 9
716 8 714 7 13
34 114 1 11 24 15 16 15 15 14 14 14
0 1
(10) 0
2018 2019 2020 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E
Notes:
(1) Yields: (Overall revenues/MF AAUM)%*100.
CAMS relatively more shielded from market share movements; commands a

premium
CAMS (32.2X FY2023E EPS) trades at a discount to HDFC AMC (34.9X FY2023E EPS, one of
its top five clients) and at a marginal premium to Nippon Life India Asset Management
(Nippon Life Indian AMC, 28.4X FY2023E EPS) (Exhibit 5).
We believe that CAMS should command a premium to AMCs in general. CAMS’ relatively
stable MF AAUM market share, high barrier to entry in a duopoly, high switching cost for
clients and relatively lower impact of volatilities in fund performance are key positives. Two
key arguments to support our call –
 CAMS is relatively more shielded from market share movements. Unlike mutual
funds, CAMS is relatively shielded from market share movements. CAMS has strong
relationships with top AMCs in India (top four out of five AMCs and top nine out of 15
AMCs are CAMS’ clients). The overall AMC industry in India is relatively concentrated with
top 10 players occupying 82.8% market share (up from 81.1% in FY2017). While
individual MFs may gain/lose market share due to fund
outperformance/underperformance and changes in distribution strategy, CAMS will likely
retain its revenue share.
 High switching cost, barriers to entry and scope for horizontal integration augur
well. Client attrition is relatively lower in the MF RTA industry as the overall process of
shifting from one RTA to another in relatively cumbersome. Additionally, AMCs are likely
more focused on garnering fresh inflows, fund management, marketing and enhancing
distribution capabilities, providing relatively less scope of disruption from incumbents. RTA
industry benefits from economies of scale and domain expertise gained over the years.
High switching cost for clients and barriers to entry for disruptors entail less risks to the
business model. Moreover, MF RTAs focus on expanding their product bouquet by
expanding into similar lines of businesses (ex. RTA for AIFs) or focus on providing
software-based value-added services for other players in the financial ecosystem (ex.
insurance repository).

Exhibit 5: CAMS trades at a discount to HDFC AMC but at a premium to Nippon Life India Asset Management
Valuation summary of India asset managers and RTAs, March fiscal year-ends, 2020-23E
Market AUM AUM CAGR EPS CAGR
CMP cap (3QFY21) (2015-20) EPS (Rs) (2020-23E) PER (X) RoE (%)
(Rs) (Rs bn) (Rs tn) (%) 2020 2021E 2022E 2023E (%) 2020 2021E 2022E 2023E 2020 2021E 2022E 2023E
CAMS 1,768 86 21 23 35.6 41.8 48.1 55.0 15.6 49.7 42.2 36.7 32.2 35.4 39.7 43.9 42.4
HDFC AMC 2,860 609 4 15 59.2 63.1 72.3 81.9 11.4 48.3 45.3 39.5 34.9 33.5 29.1 29.1 28.8
Nippon Life India AMC 330 203 2 15 6.8 10.1 10.1 11.6 19.7 48.6 32.7 32.8 28.4 16.1 24.0 21.7 23.9
UTI AMC 558 70.8 2 7 21.5 34.2 30.1 36.9 19.7 25.9 16.3 18.6 15.1 10.2 16.5 13.9 15.3
Notes:
(1) AUM refers to MAAUM for period-ending month for HDFC AMC and NAM while it refers to AAUM for the period for CAMS.
Source: Company, Bloomberg, Kotak Institutional Equities estimates
SS&C trades at a rich valuation due to a diverse offering

SS&C Technologies, the largest mutual fund transfer agent globally, trades at ~27X trailing
PER. SS&C has a unique business model that combines end-to-end expertise across financial
services operations with software and solutions to service a diversified customer base in the
financial services and healthcare industries.
SS&C owns and operates the full technology stack across securities accounting, front-to-
back-office operations, performance and risk analytics, regulatory reporting, and healthcare
information processes. Apart from being the largest mutual fund transfer agent globally, the
company is also the world’s largest private equity and hedge fund administrator.
Additionally, the company offers a diverse product bouquet to the healthcare industry
including pharmacy, healthcare administration and health outcomes optimization solutions
including claims adjudication, benefit management, care management and business
intelligence services.
It acquired DST Systems in CY2019 including various other inorganic expansionary strategies
adopted over the years. The company is hence not directly comparable to CAMS.
Increasing regulatory and compliance pressure, strong relationship with clients in different
domains (SS&C Technologies has tie-ups with >1,100 clients operating as AMCs, hedge
funds, AIFs, etc.) and continued investment in new software capabilities likely drive premium
for SS&C. Overall client base is high at >18,000 clients, providing granularity to earnings
profile.
SS&C Technologies delivered strong 29% CAGR in revenues over CY2011-17 and 35% yoy
growth in revenues in CY2019 (numbers from CY2018 onwards are not comparable to
historical values as the company acquired DST systems in CY2018). Earnings growth was
strong at 36% CAGR over CY2011-17 (up >2.3X in CY2019 adjusted for expenses incurred
for inorganic expansion in CY2018) (Exhibit 6). Strong addition to client base, robust pace of
product and service diversification and expanding business reach and verticals through
inorganic acquisitions have been key levers for growth.
We believe that CAMS may not be directly comparable with SS&C, the latter has a much
more diverse offering and is less dependent on any single sector.
The State Street Corporation, a large investment servicing-transfer agent in the US is also
engaged in investment management. The company trades at ~11X trailing PER (Exhibit 7);
this compares with other AMCs that mostly trade at 15-25X. State Street has delivered
muted 1% CAGR in revenues over CY2014-19 translating to 3% PBT CAGR over CY2014-
19; continued decline in yields to 1.48 bps in CY2019 from 1.81 bps in CY2014 is the key
driver.

Exhibit 6: Strong growth in revenues for SS&C Technologies while it has been muted for State Street Corporation
Financial highlights for SS&C Technologies and State Street Corporation, calendar year-ends, 2009-19
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
SS&C Technologies
Overall revenues (3.2) 21.4 12.7 48.8 29.1 7.7 30.3 48.1 13.1 104.2 35.4
Overall expenses (5.2) 22.2 11.2 54.7 23.6 7.1 47.2 42.7 7.2 134.0 24.3
EBITDA (0.4) 19.0 12.0 35.1 56.3 5.8 (4.6) 80.2 20.5 45.8 87.2
PBT 11.1 54.2 66.4 (4.7) 106.0 22.4 (65.8) 168.9 72.8 (55.7) 325.0
PAT 1.2 70.4 57.4 (10.2) 157.3 11.2 (67.3) 205.6 151.1 (68.6) 324.9
EPS 47 43 (13) 151 9 (85) 191 142 (73) 295
Key ratios
EBITDA margin (% of revenues) 37.5 36.8 36.6 33.2 40.2 39.5 28.9 35.2 37.4 26.7 36.9
Core cost-to-income (%) 75.2 75.7 74.7 77.7 74.3 73.9 83.5 80.5 76.3 87.5 80.3
ROE (%) 2.9 4.3 5.6 4.5 10.2 10.2 2.5 6.0 13.3 2.8 9.0
State Street Corporation (investment servicing segment
Overall growth in fee income (23) 13 11 (2) 7 6 5 (4) 8 2 (4)
Servicing fees (11) 18 11 1 9 6 1 (2) 6 1 (7)
Others (40) 3 10 (10) 1 4 17 (11) 13 6 3
Net interest income 1 3 (13) 10 (8) (1) (7) (0) 11 17 (4)
Other income NM (59) 16 3 (113) NM (250) NM (657) NM 617
Overall expenses (10) 9 8 2 2 7 5 (5) 1 6 1
PBT (21) 7 (6) (0) (0) (4) (8) 2 29 8 (13)
Key ratios
Servicing fee to AAUC (bps) 1.8 1.8 2.0 1.8 1.7 1.8 1.9 1.8 1.6 1.7 1.5
Core cost-to-income (%) 68.7 68.4 71.2 71.6 71.5 73.9 76.4 75.2 69.9 69.7 73.0
PBT margin (% of total income) 32.6 32.1 29.3 29.0 28.5 26.1 23.6 24.9 29.8 30.3 27.3
Notes:
(1) EBITDA for SS&C Technologies includes other income.
(2) Core cost-to-income for SS&C Technologies: (Operating expenses cost of revenues)/(revenues)*100.
(3) SS&C Technologies acquired DST Systems in CY2018 and as such growth rates for CY2018 are not comparable.
(4) Core cost-to-income for investment servicing unit of State Street Corporation: Overall expenses including provisions/total income*100.
Source: Company, Kotak Institutional Equities
Exhibit 7: SS&C Technologies trades at a premium to State Street and other AMCs
Trailing PE multiple for global transfer agents and AMCs, calendar year-ends, March 2011-March 2021 (X)
SS&C Technologies State Street Corporation Blackrock T. Row Price

65
53
41
29
17
5
Nov-11
Nov-13
Mar-11
Nov-12
Nov-16
Jul-11
Mar-13
Nov-14
Nov-15
Jul-13
Mar-15
Jul-15
Mar-17
Nov-17
Nov-18
Mar-19
Nov-19
Nov-20
Mar-12
Jul-12
Mar-14
Jul-14
Mar-16
Jul-16
Jul-17
Jul-19
Mar-21
Mar-18
Jul-18
Mar-20
Jul-20
Source: Bloomberg, Kotak Institutional Equities

MF RTA: DUOPOLY DOMINANCE BUT PRICING POWER SKEWED TOWARDS AMCS

MF RTAs are integral to the MF ecosystem providing an entire gamut of back office services to MFs,
distributors, investors and other stakeholders. RTAs’ revenue, though mostly linked to MF AUM growth, has
lagged growth in served assets due to consistent yield compression. Importantly, high revenue concentration
from top clients (top 10 AMCs have >80% market share in MF AAUM) skews pricing power towards AMCs.
Despite limited pricing power, high switching cost, elevated upfront capital requirements and economies of
scale create entry barriers, providing RTAs a relatively safe play in capital markets. With a modest expectation
of MF AUM growth, we expect RTAs to deliver 11% revenue CAGR during FY2021-26E, down from 15%
during FY2016-20. Continued investment in technology and inorganic opportunities to diversify product
offerings lowers scope for improvement in cost ratios; horizontal integration into similar services like AIF RTA
and insurance repository help expand revenues.
Mutual fund RTAs provide a wide gamut of services to clients

Registrar and transfer agents (RTAs) provide diversified services to mutual fund houses,
distributors, investors and other stakeholders through proprietary technology platforms,
branch network and call center services.
RTAs practically act as a transaction back-office of the MF AMCs. An RTA, among other
things, (1) offers transaction origination services (both paper-based and electronic), including
managing KYC, (2) accepts and executes orders on behalf of mutual funds and provides
transaction processing and payments services, (3) accepts and processes transaction requests
of investors and reports its effect on the unit capital and (4) computes and pays brokerage
fees and reconciles bank accounts.
Thus, MF RTAs effectively act as partners for mutual fund houses, service aggregators for
value-based offerings, offer customer touch-points for investors and distributors, business
enablers and distribution engines at a wide scale (Exhibit 8). These entities provide wide
access, assist in increasing sales and help save cost overheads for mutual fund houses with
their geographically spread out branches and back-end call centers along with proprietary
technology platforms. This helps the management of the MFs to focus on its key functions,
viz. marketing and distribution. Some key characteristics of MF RTAs are described below.
 Partner for mutual fund houses. Incumbent MF RTAs are associated with mutual fund
houses since inception and have demonstrated the capability to handle the nuances of
the industry. The mutual fund industry has collected extensive data on investor behavior,
requirements, preferences, etc., which impacts decisions related to new launches and
scheme composition changes, etc. The large volume of information is replicated into
technology systems to maintain it for actionable insights. This requires huge
infrastructural capability. Additionally, processing and maintaining transaction (both
digital and paper-based) details requires expertise. MF RTAs apply analytical
solutions to the accumulated data and support clients in the development of innovative
products.
 Service aggregator for driving value-based offerings. MF RTAs have various business
continuity mechanisms in place with mutual fund houses to attract and retain customers
in a dynamic and competitive environment in a cost-efficient manner. For example, a
simple change in alerts and notifications requires considerable technical investment
from a mutual fund’s perspective, but for MF RTAs, this is just a one-time investment,
which can be leveraged for all other clients.

 Operational integration and customer care services. MF RTAs have been instrumental
in providing operational efficiency to clients. These entities have enabled fund houses to
come up with timely launches backed by infrastructural stability amid growing investor
intensity. On-boarding a large number of customers or subscribers to these funds
and maintaining their records in addition to adhering to the customer service
standards expected in the industry are largely possible owing to the strong infrastructure
backbone provided by MF RTAs.
 Risk management and business enablers. Maintaining security standards is absolutely

crucial for MF RTAs. There is a high risk of disruption in operations and customer
experience in case of failure of these systems. MF RTAs have acquired domain-centric
capabilities from multiple partners, which are difficult to replicate.
 Value-added services provided to multiple stakeholders in mutual fund industry.

In addition to regular services, MF RTAs have evolved their service offerings and set up
digital platforms for retail and corporate investors as add-ons. Having better
understanding of investor queries and dedicated platforms for the relevant audience on
multiple fronts has increased the importance of these entities in query handling and
resolution.
Exhibit 8: MF RTAs act as one-stop solution for providing value-added services to mutual fund houses
and other related stakeholders
MF RTA
Knowledge Valued added

Customercare
partner for Service Business services enhancing
service touch-
mutual fund aggregator enablers industry-wide
points
houses network and reach
Source: Company
RTA is a niche segment, integral to the MF ecosystem

RTA is a niche business with total revenue pool of ~Rs10.1 bn in FY2020 (Rs9 bn of MF RTA
revenues and ~Rs1.1 bn of RTA revenues from AIFs) as compared to the revenue pool of
~Rs250-260 bn for Indian AMCs. RTA revenues in the India MF industry have grown by 15%
CAGR during FY2016-20 (high growth phase for India mutual fund industry with MF AAUM
CAGR of ~19% over FY2016-20), similar to revenue CAGR for AMCs. RTAs’ fees are
primarily linked to AUMs (mostly charged as ~1.5-6 bps of AAUMs depending on AUM mix;
blended yield of ~3.8 bps of AAUM as of FY2020; this may however be a bit inflated as it
includes some portion of non-AUM-linked fees also) and hence directly linked to growth in
MF AAUMs; the ratio being negotiated periodically.
RTA revenue lags MF AAUM growth; further moderation over medium term
 Strong revenue growth during FY2016-20 though lagging MF AAUM growth.

CRISIL pegs the overall revenues of the MF RTA industry at ~Rs9 bn for FY2020 (up ~18%
CAGR over FY2015-20). Additionally, revenues from AIFs is gauged at ~Rs1-1.2 bn for
FY2020 (~10% of overall revenues for MF RTAs); this was significantly lower in FY2015
(Exhibit 9).

 Rough estimates suggest that MF RTAs reported strong growth in revenues (including
revenues from AIFs) at ~15% CAGR over FY2016-20 (~18% CAGR over FY2015-20)
on the back of (1) 19% AAUM CAGR in MF AAUM (FY2016-20), (2) increase in share
of high-yielding actively managed equity-oriented assets to ~41% in FY2020 from ~31%
in FY2016 (Exhibit 10) despite increase in share of low-yielding ETFs (~6% in FY2020
from ~1.5% in FY2016), (3) gradual shrinkage in yields in the MF RTA segment (overall
revenues from MF segment to average MF AAUM) to ~3.8 bps in FY2020 from ~4.1
bps in FY2016 and (4) rise in contribution of AIF revenues in overall revenue mix.
 Yields compressed despite increase in share of high-yielding assets owing to (1) increase
in AUM size per scheme (fees charged by MF RTA follow a tiered structure similar to
TER charged by AMCs) and (2) renegotiation and decline in fees as select AMCs likely
passed on the impact of TER cut to RTAs (apart from distributors) (Exhibit 11).
 RTAs delivered similar growth as AMCs; might be difficult to sustain. During

FY2016-20, MF RTAs delivered similar revenue growth compared to AMCs at ~15%
CAGR. Revenue growth for MF RTAs, however, superseded revenue growth of their top
clients over the past two years; this may be difficult to sustain.
 The growth in revenues for MF RTAs was higher than the revenue growth for their top
clients. For example, CAMS delivered ~15% CAGR in revenues over FY2016-20
compared to 14% for HDFC AMC and ICICI Prudential AMC (Exhibit 12). While most
AMCs delivered strong growth over FY2015-18 (larger clients of RTAs delivered
superior growth compared to RTAs), lower inflows, regulatory pressure and moderation
in pace of growth in high-yielding actively managed equity-oriented funds led to a
sharp decline in the pace of revenue growth. In FY2019 and FY2020, CAMS delivered
higher growth at 8% yoy and 1% yoy compared to 4% yoy growth and 6% yoy decline
for HDFC AMC and 1% yoy and 4% yoy decline for ICICI Prudential AMC, respectively.
 On the back of moderate inflows, underperformance of active funds, higher focus on

realigning interest of distributors by likely increasing commission and stringent cost
control, revenue growth (post distributor pay-outs) will likely remain weak for AMCs.
Under such circumstances, AMCs might intend to aggressively push for reducing RTA
cost to manage overall earnings. Unlike a duopoly, the pricing power is relatively more
skewed towards AMCs due to high contribution to overall revenues by top players
(overall MF AAUM managed by top 10- players is ~83% and top 5 client contribute
~67% of CAMS’ revenues).
 Revenue growth for RTAs to taper down. We expect MF RTAs to deliver 11% CAGR
in revenues over FY2021-26E and marginally moderate to 9% CAGR over FY2026-31E
translating to 20% CAGR over FY2021-31E; this compares with 11% revenue CAGR for
the AMC industry over FY2021-31E (13% CAGR over FY2021-26E and 10% over
FY2026-31E). We expect yield compression, moderation in AAUM CAGR (16% CAGR
over FY2021-26E compared to 19% over FY2016-20), lower share of high-yielding
actively managed equity assets over FY2020-22E and rise in share of low-yielding ETFs to
be a key driving forces for moderation in the pace of revenue growth. Apart from the
change in AUM mix and impact of tiered fee structure, we do not rule out further fee
renegotiation by top AMCs with higher bargaining power.
 MF AAUM growth to moderate. We expect overall MF AAUM growth to moderate

to 16% CAGR over FY2021-26E compared to 19% over FY2016-20 on the back of
tepid inflows.

 Yields under pressure. Fees charged by MF RTAs differ based on AUM composition
and quantum of AUM (tiered price structure similar to TER). Fees on equity AUM are
higher than others. According to CRISIL, fees charged on equity AUM declined to 5.9
bps in FY2020 (6.2 bps in FY2019) from 6.7 bps in FY2017 and 7.5 bps in FY2015.
Increased AUM per scheme and increasing share of low-yielding ETFs will pose
pressure on fees. Additionally, shares of high-yielding actively managed equity assets
have moderated a bit from peak levels.
Exhibit 9: MF RTA industry likely to deliver 10% revenue CAGR over FY2021-31E, marginally lower than 11% CAGR for AMCs
MF RTA and AMC market in India, March fiscal year-ends, 2016-31E
CAGR (%)
2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2016-20 2021-26E 2026-31E 2021-31E
MF RTA market in India
MF AAUM (Rs tn) 13 16 22 23 26 29 35 40 46 53 61 70 80 91 104 118 19 16 14 15
MF RTA revenues (Rs bn) 6 7 10 9 10 10 12 13 14 15 17 18 20 22 24 25 15 11 9 10
Calculated yields (bps) 4.11 4.08 4.05 4.03 3.84 3.53 3.34 3.18 3.00 2.89 2.77 2.64 2.52 2.39 2.27 2.14 -27 bps -77 bps -62 bps -139 bps
AMC market in India
MF AAUM handled (Rs tn) 13 16 22 23 26 29 35 40 46 53 61 70 80 91 104 118 19 16 14 15
AMC revenues (Rs bn) 149 187 261 270 258 290 345 375 421 474 532 593 655 717 781 848 15 13 10 11
Calculated yields (bps) 1.16 1.16 1.26 1.14 1.05 1.02 1.00 0.94 0.92 0.89 0.87 0.85 0.82 0.79 0.75 0.72 -12 bps -14 bps -16 bps -30 bps
Source: Company, CRISIL, Kotak Institutional Equities estimates
Exhibit 10: Share of high-yielding actively managed equity-oriented assets has increased over FY2016-20
Share of actively-managed equity-oriented MAAUM to overall MAAUM for AMCs, March fiscal year-ends, 2014-20, 10MFY21
2014 2015 2016 2017 2018 2019 2020 10MFY21
Proportion of actively-managed equity oriented MAAUM
Aditya Birla Sun Life 13.8 21.8 23.7 26.8 34.8 36.9 33.5 35.4
Axis AMC 18.5 30.9 33.4 33.3 44.9 52.2 50.6 52.7
DSP Mutual Fund 28.4 41.9 40.9 40.7 47.6 51.9 51.7 54.8
Franklin Templeton 30.3 35.5 48.1 54.3 51.9 44.5 42.4 56.5
HDFC AMC 34.7 41.8 35.8 40.3 50.4 47.2 42.0 40.9
ICICI Prudential AMC 21.0 32.6 33.5 37.3 45.8 46.4 41.1 40.8
IDFC Mutual fund 19.4 26.6 24.1 23.0 29.4 31.6 26.2 21.6
Kotak AMC 10.6 21.2 22.3 23.7 36.1 35.0 36.4 36.4
Mirae AMC 4.0 93.3 93.5 93.4 86.4 87.8 87.6 89.1
Nippon India AMC 23.6 32.2 29.6 27.5 35.5 40.7 39.3 39.8
SBI AMC 21.4 28.9 26.7 30.0 33.9 31.9 27.3 26.4
Tata AMC 19.3 26.6 32.2 29.6 34.4 44.1 48.7 51.2
Total of above players 23.2 32.3 31.4 33.2 40.7 41.4 38.6 39.2
Others 21.6 29.2 28.7 30.1 37.1 38.5 36.6 37.7
Source: AMFI, Kotak Institutional Equities
Exhibit 11: Yields have dropped for MF RTAs

Fees charges by MF RTA to AUM, March fiscal year-ends, 2015-20 (bps)
2015 2017 2019 2020

Equity funds 7.5 6.7 6.2 5.9
Hybrid 7.8 6.1 6.0 6.0
Debt 2.4 2.2 2.2 2.2
Liquid 3.3 2.0 2.0 2.0
Others 4.3 2.4 1.6 1.5
Source: CRISIL

Exhibit 12: MF RTAs have delivered stronger growth compared to their larger clients over the past
few years
Gross revenue growth for AMCs (charged at scheme accounts) and MT RTA, March fiscal year-ends, 2017-20
(%)
CAGR (%)
2017 2018 2019 2020 (2016-20)
CAMS 20.2 34.1 8.1 0.9 15.2
HDFC AMC 21.4 43.9 3.6 (6.1) 14.2
ICICI Prudential Life AMC 33.1 35.5 (1.4) (3.9) 14.4
KFin Technologies (including Sundaram BNP Paribas) 32.5 30.2 (6.7) 6.7 14.5
NAM 20.0 33.7 (2.4) (17.4) 6.7
Notes:
(1) Gross revenue data for KFin Technologies (including Sundaram BNP Fund Services Limited) are KIE
estimates and gross revenue for NAM for FY2016 is an estimated value.
Low mutual fund penetration and lower performance-related risks augur well
 Low MF penetration in India. AUM growth will likely taper down over the medium
term from peak levels, however, low MF penetration compared to global averages will
likely support the long-term growth trajectory (Exhibit 13). Product innovation, enhancing
distribution capabilities, rising dominance of direct channels and increasing penetration
among retail customers in B-30 cities will likely support growth. MF RTAs tend to benefit
the most in times of strong MF AUM growth as they are relatively shielded from changes
in market share. Unlike in the case of AMCs, we expect the market share of players in the
MF RTA market to be broadly stable.
 RTAs remain relatively more shielded to performance-related risks. Unlike AMCs,

the market shares of RTAs are indirectly related to the performance of their clients and do
not shift much based on performance of funds or diversification in the channel mix.
Inorganic expansion by AMCs and consolidation of larger players, however, result in a
change in market share. As such, RTAs are less exposed to fund performance cycles and
are relatively shielded from sudden pressure on revenues.
Exhibit 13: Mutual fund penetration (especially equity AUM) is quite low in India compared to other
countries
Mutual fund penetration (MF and equity AUM to GDP), March fiscal year-ends, December 2018 (%)
MF AUM to GDP (LHS) Equity AUM to GDP (RHS)

125 75 80
100 55 64
75 40 48
34 36
28 27
50 23 32
18
25 6 16
3 5
120 80 81 68 67 63 63 48 40 32 13 12
0 0
USA
Korea
Africa
China
Germany
India
UK
South
Canada
France
Japan
World
Brazil
Notes:
(1) Only open-ended funds have been considered (includes equity, debt and others) for calculating overall MF
AUM to GDP.
(2) Only open-ended funds have been considered for calculating equity AUM to GDP. For balanced/mixed
funds, 70% of equity mix is assumed. Guaranteed/protected and real estate funds are not considered.
Source: CRISIL

Revenue contribution from AIFs to increase over time

CRISIL pegs overall revenues garnered by MF RTAs from AIFs at ~Rs1-1.2 bn, translating to
~10% of overall revenues for RTAs. The share of revenues from AIFs has increased over the
past few years and will likely support overall revenues going ahead. Globally, RTAs have
developed customized solution for AIFs and are normally able to command higher yields.
Proprietary domain knowledge and agility to customize solution based on regulatory
requirements augur well for MF RTAs in India.
Funds raised by Indian AIFs increased to Rs2.1 tn as of December 2020 from Rs227 bn as of
FY2016. The amount of investments made by AIFs rose to Rs1.8 tn during the same period
from Rs182 bn (up 64% CAGR over FY2016-20) (Exhibit 14). While the pace of growth will
moderate from peak levels (impact of low base gradually decreasing), CRISIL expects AIFs to
deliver strong growth at 30-35% CAGR over FY2019-24E.
Exhibit 14: Strong growth in AIFs; albeit moderation in pace of growth

Cumulative investments by AIFs, March fiscal year-ends, 2014-20, 3QFY21
AIF (LHS) YoY (RHS)

(Rs bn) 146 (%)
5,000 150
131
4,000 120
93
3,000 75 79 90
2,000 60
40
32 30
1,000 1,845 30
1,534 1,657
1,098
32 74 182 351 614
0 -
2014 2015 2016 2017 2018 2019 2020 2QFY21 3QFY21
Source: CRISIL, SEBI, Kotak Institutional Equities
Despite a duopoly, pricing power skewed towards AMCs

Two RTAs in India
The MF RTA industry in India is duopolistic in nature with only two players: CAMS and KFin
Technologies. CAMS is the market leader and manages ~70% of MF AAUM (~73-74%
including AUM of Franklin Templeton) while KFin Technologies manages the remaining ~26-
27% (Exhibit 15).
CAMS manages the RTA business for top four of the five largest mutual funds (in terms of
AAUM) and nine among the top 15 mutual funds (excluding the acquired business of
Franklin Templeton). Among top players, Nippon Life India Asset Management and UTI Asset
Management are managed by KFin Technologies as of 3QFY21.
KFin Technologies acquired Sundaram BNP Paribas Fund Services Limited (managed two
clients with ~2% of AUM) in October 2019. Franklin Templeton has entered into an
arrangement with CAMS to transfer its RTA business to the latter from an in-house model
followed previously (effective from 3QFY21).
B2B business and high concentration of top MFs lower pricing power of RTAs
Growth in MF AUM is skewed for larger players with a wider presence. Exhibit 16 shows that
the share of top 10 players in overall mutual fund AAUM has increased to ~83% in 10MY21
from ~77% in FY2015 (share of top five players increased to ~57% from ~55% during the
same period). Growth in AUM drives revenues for MT RTAs, while lower pricing power with
key clients with a strong financial backbone and vast presence has led to yield compression.
Over the past four years, fees charged by MF RTAs dropped across all fund classes.

Exhibit 15: MF RTA market is a duopoly

MF AAUM market share for MF RTAs in India, March fiscal year-ends, 2015-20, 4MFY21
(%) CAMS Kfin Technologies Franklin Templeton Sundaram BNP Paribas

2 2 - -
100 4 3
6 5
26 27 27
80
31
60
40
68 69 70
61
20
0
2015 2019 2020 4MFY21
Notes:
(1) Infra funds (IIFCL and IL&FS Asset Management) have been excluded from industry's AUM for computation
of market share.
(2) Post October 2019, Sundaram BNP Paribas Fund Services has been acquired by Karvy Fintech Limited (now
renamed as KFin Technologies).
(3) Franklin Templeton has entered into an arrangement with CAMS to transfer its RTA business to the latter
from 2HFY21E. As of 3QFY21, CAMS had 70% market share and the business is yet to be transferred.
Source: Company, CRISIL, Kotak Institutional Equities
Exhibit 16: Top 10 AMCs constitute ~83% of MF AUM market in India

MF MAAUM market share across AMCs, March fiscal year-ends, 2014-20, 10MFY21
2014 2015 2016 2017 2018 2019 2020 10MFY21
Market share in total MAAUM
Axis AMC 1.8 2.3 2.9 3.2 3.3 3.8 5.3 6.1
DSP Mutual Fund 3.5 3.0 2.8 3.5 3.8 3.2 3.0 3.0
HDFC AMC 12.7 13.6 13.1 12.9 13.2 14.1 13.7 13.2
IDFC Mutual fund 4.6 4.5 3.8 3.2 3.0 2.9 4.0 3.9
Kotak AMC 3.7 3.6 4.4 5.2 5.4 6.2 6.9 7.3
Mirae AMC 1.8 0.2 0.2 0.4 0.7 1.0 1.6 2.1
Nippon India AMC 11.5 11.7 11.8 11.5 10.6 9.3 7.5 7.1
SBI AMC 7.6 6.5 8.1 8.8 9.6 11.8 14.2 15.6
Tata AMC 2.5 2.4 2.4 2.4 2.1 2.2 1.9 2.0
Top 10 78.2 79.5 80.0 81.1 81.0 82.7 83.0 82.8
Others 15.7 15.7 14.5 13.0 13.3 11.1 10.5 10.5
Notes:
(1) We have considered MF MAAUM for period-ending month.
Market dynamics unlikely to alter

We do not see a significant change in market dynamics even as yields continue to compress.
Learnings from global markets and domestic channel checks suggest that AMCs prefer to
outsource the transfer agency business to third party providers. Standalone RTAs (e.g. CAMS,
KFin Technologies or global players like SS&C Technologies, etc.) or large financial
conglomerates (BNY Mellon, State Street Corporation, etc.) carry out the transfer agency
business. Consolidation and investment in technology to drive horizontal integration are key
characteristics of RTAs. In the domestic context, the industry has consolidated over the years
with two players currently in the market. RTAs continue to invest in technology initiatives to
increase value proposition for MF stakeholder or penetrate related business segments (ex.
transfer agency business for AIFs).

 High upfront costs. High initial (upfront fixed capital investment to build technological
prowess) and recurring investments in technology, regulatory barriers, need for a pan-
India branch network (CAMS, the market leader, had 271 branches and KFin
Technologies had 203 branches as of FY2020), operating leverage from high business
volumes and domain expertise acquired from industry experience pose high barriers to
entry and high switching cost.
 Shift to direct plans does not have an impact on MF RTA revenues. MF MAAUM
under direct plans grew at a CAGR of 24% during FY2016-10MFY21 to Rs15 tn from
Rs12.9 tn. The share of direct plans to overall AUM has increased to 46% of the
industry’s AUM as of 10MFY21 from 38% in FY2016 (Exhibit 17). The primary difference
between the variation in fees of regular and direct plans is the savings on distributor fees
due to which the overall TER for direct plan is lower compared to regular plans. Market
sources suggest that for now there is no impact on management fees. Notably, fees
charged by MF RTAs are based on AUM, irrespective of which plan is opted for by an
investor (Exhibit 18).
Exhibit 17: ~20% of actively managed equity MAAUM is Exhibit 18: Rising interest in direct plans to not impact the
originated through direct channel business of MF RTAs
MAAUM mix through direct channel, March fiscal year-ends, 2014- Break-up of TER on regular and direct plans
20, 10MFY21 (%)
Distributor fee Management fee RTA/other fees
(bps)
Direct Direct (actively-managed equity oriented) 250
50 45.4 46.4
42.0 30
40.7 41.1 200
38.4
41 35.0 33.9
32 150 30
140
23 19.3 19.8
16.4 16.2 100
13.8 14.6
11.0
14 8.4 140
50
5
60
2015
2017
2019
2014
2016
2018
2020
10MFY21
0 0
Regular plan expense ratio Direct plan expense ratio
Source: AMFI, Kotak Institutional Equities Source: CRISIL
CAMS versus KFin: higher AUMs for CAMS; revenue CAGR similar
As discussed previously, the MF RTA market is a duopoly with the two players demonstrating
strong performance over the past few years. Among them, the market leader, CAMS, has
outperformed its immediate competitor on most parameters over the past few years. As
such, the two players run a technology-intensive business with high upfront fixed cost of
investment.
 CAMS delivered higher AUM growth; performs similar on revenues. MF RTAs have
demonstrated strong growth in serviced AAUM largely on the back of a robust pace of
overall MF AUM growth. Growth in AAUM for CAMS was, however, higher at 23%
CAGR over FY2016-20 compared to 12% for KFin Technologies (including data for
Sundaram BNP Paribas Fund Services Limited). Revenue growth for KFin Technologies was,
however, similar to CAMS at ~15% CAGR despite relatively lower AAUM growth. This
was interplay of three factors –

 Clients managed by CAMS gained market share and reported stronger AUM growth
and thus effective yields shrunk due to tiered fee structure (AAUM growth for CAMS
was ~23% CAGR compared to 12% CAGR for KFin Technologies during FY2016-20).
 Compression in yields for KFin Technologies (including business of Sundaram BNP

Paribas Fund Services Limited) was likely lower than CAMS; this was likely due to
increase in actively managed equity-oriented business for smaller players (share of
actively managed equity oriented MAAUM for top-10 players declined to 78.1% in
10MFY21 from 83% in FY2016 (Exhibit 19).
 Lower AUM per scheme for smaller players compared to the larger ones managed by
CAMS (Exhibit 20).
Exhibit 19: Top 10 AMCs have ~78% market share in equity-oriented AUM
Market share in equity-oriented MAAUM, March fiscal year-ends, 2014-20, 10MFY21
2014 2015 2016 2017 2018 2019 2020 10MFY21
Market share in equity oriented MAAUM
Axis AMC 1.5 2.3 3.1 3.3 3.6 4.6 6.8 8.0
DSP Mutual Fund 4.5 4.1 3.7 4.4 4.4 3.9 3.9 4.1
HDFC AMC 19.9 18.5 15.1 15.8 16.2 15.6 14.4 13.3
IDFC Mutual fund 4.0 3.8 2.9 2.2 2.1 2.2 2.6 2.1
Kotak AMC 1.8 2.5 3.2 3.7 4.7 5.1 6.4 6.5
Mirae AMC 0.3 0.5 0.7 1.2 1.5 2.2 3.5 4.6
Nippon Life India AMC 12.3 12.2 11.2 9.7 9.2 8.9 7.4 6.9
SBI AMC 7.3 6.1 7.0 8.0 7.9 8.9 9.7 10.2
Tata AMC 2.2 2.0 2.5 2.1 1.7 2.3 2.3 2.5
UTI AMC 10.6 8.7 7.4 6.3 4.8 4.7 4.4 4.8
Top 10 85.2 83.3 80.2 82.7 80.7 79.9 78.5 78.1
Others 11.2 11.9 13.6 11.8 13.9 13.5 13.1 13.6
Notes:
(1) We have MAAUM for respective period-ending month.
Exhibit 20: CAMS manages clients with higher AAUM

Peer comparison across MF RTAs, March fiscal year-ends, 2015-20
CAGR
2015 2016 2017 2018 2019 2020 (%)
AAUM (Rs tn)
CAMS 6.6 7.9 10.3 13.8 15.9 18.1 22.3
KFin Technologies 3.4 4.5 5.3 6.7 6.1 7.1 16.1
Clients (#)
CAMS 15 15 15 15 16 16 1.3
KFin Technologies 23 22 21 21 22 22 (0.9)
AAUM per client (Rs bn)
CAMS 442 529 686 917 996 1,134 20.8
KFin Technologies 135 186 231 290 254 323 19.1
Notes:
(1) Data for KFin Technologies also include data for Sundaram BNP Paribas Fund Services Limited. Sundaram
BNP Paribas Fund Services Limited has been acquired by Karvy Fintech Private Limited (now renamed as
KFin Technologies) post October 2019.
(3) AAUM per client: Outstanding AAUM/number of clients outstanding as of the end of the respective period.
Source: CRISIL, Kotak Institutional Equities

Lessons from global peers: yields compress and margins shrink; cost ratios
remain elevated
We studied two global RTAs: SS&C Technologies (standalone RTA with horizontal
integration model) and investment serving segment of State Street Corporation (asset
manager with vertical integration model) to understand key trends in the RTA business
globally. Disruptions are lower due to high switching cost, high upfront investment to be
incurred by possible disruptors, gains from economies of scale for larger players and
technological dominance acquired over the years. Most players tend to gain dominance by
acquiring smaller players, mostly software firms that have developed core competencies in
select product or service classes.
State Street Corporation
The investment servicing segment for State Street Corporation provides services for
institutional clients, including mutual funds, collective investment funds and other
investment pools, corporate and public retirement plans, insurance companies, investment
managers, foundations and endowments. Key products include custody (product and
participant level accounting), daily pricing and administration, master trust and master
custody, record-keeping, brokerage and other trading services, performance, risk and
compliance analytics to support institutional investors, etc.
 Slower growth in AAUC and yield compression over CY2014-19. Overall revenue
growth was muted at 1% CAGR over CY2014-19 for the investment servicing unit of
State Street Corporation owing to flat growth trajectory in the core revenues (servicing
fees). Servicing fees were flat over CY2014-19 owing to (1) muted 4% CAGR in AAUC
(average assets under custody) and (2) shrinkage in calculated yields to ~1.5 bps in
CY2019 from ~1.8 bps in CY2014; increasing share of low-yielding ETFs was a likely
driver (Exhibit 21). Revenue growth was, however, stronger at 7% CAGR over CY2009-
14 led by 8% CAGR in AAUC and broadly stable yields.
 While revenues from the core business remained muted, income from non-core
segments picked up in CY2014-19 to 5% CAGR from 1% CAGR over CY2009-14. The
share of non-core revenues increased to 30% in CY2019 from 27% in CY2017 and 24%
in CY2014. This provided support to earnings.
 Cost ratios remain elevated. Despite pressure in revenues, core cost ratios remained
elevated and expense growth was marginally higher than growth in servicing fees over
CY2014-19. Calculated core cost-to-income remained high at ~70-74% over CY2014-19
(Exhibit 22).
 Margins held on; albeit lower than historical peaks. Calculated PBT margins were
stable in the range of 24-30%. Margins compressed sharply over CY2008-15 to 24% in
CY2015 from 35% in CY2008; it, however, recovered thereafter owing to increase in the
pace of growth of non-core revenues.
SS&C Technologies
SS&C Technologies is the largest hedge fund and private equity administrator, as well
as the largest mutual fund transfer agent. SS&C Technologies revenues, earnings and
expenses growths are not strictly comparable across years as the company pursued various
inorganic activities over the past few years (ex. acquired DST Systems in CY2018).
 Strong 19% EPS CAGR over CY2009-19. SS&C Technologies has delivered strong
growth over the past decade at 19% EPS CAGR over CY2009-19. Strong growth in
revenues supported profitability even as cost ratios remained elevated. Strong growth in
revenues was driven by (1) increasing share of the highly profitable PMS/AIF RTA business
and (2) horizontal integration into the healthcare business. Growth in revenues was
significantly higher at 33% CAGR due to higher incremental business from inorganic
acquisitions (26% CAGR over CY2009-17 prior to the major acquisition of DST Systems).

 Margins collapsed over CY2015-19 on the back of elevated cost ratios. Cost ratios
remained elevated for SS&C Technologies over the past few years. Calculated core cost-
to-income was elevated at 76-88% over CY2015-19 compared to 74-78% over CY2009-
14 (Exhibit 23). Elevated cost pressure shrinkage in EBITDA margins (calculated) to 27-37%
over CY2015-19 can be compared to 33-40% over CY2009-14 (Exhibit 24).
 Operating leverage in this business tends to be low due to continued investment in

technology initiatives, inorganic opportunities to gain from economies of scope and
continued focus on diversifying business lines and offerings (mostly relevant for
standalone players).
Exhibit 21: Calculated yields have compressed in investment Exhibit 22: Elevated cost ratios have led to margin shrinkage for
servicing for State Street Corporation investment servicing segment of State Street Corporation
Growth in servicing fees, AAUC and calculated yields in investment Calculated PBT margin and core cost-to-income for investment servicing
servicing for State Street Corporation, calendar year-ends, 2009-19 segment of State Street Corporation, calendar year-ends, 2008-19
Servicing fee yoy (LHS)

AAUC yoy (LHS) Core cost-to-income (LHS) PBT margin (RHS)
Servicing fee to AAUC (RHS) (bps)
22.5 (%) 2.25 80 40
2.01 35
15.0 2.05 75 36
1.87 33 32
1.83 1.81 1.81
7.5 1.77 1.75 1.76 1.85 70
29 29 30 30 32
1.72 28
1.62 27
0.0 1.65 65 26 28
25
1.48 24
-7.5 1.45 60 24
64 69 68 71 72 71 74 76 75 70 70 73
55 20
-15.0 1.25
2008
2010
2012
2013
2015
2016
2017
2018
2009
2011
2014
2019
2010
2011
2013
2014
2016
2017
2018
2009
2012
2015
2019
Notes:
Source: Company, Kotak Institutional Equities (1) Core cost-to-income: (Overall expenses+provisions)/(total income-
other income)*100.
(2) PBT margin is calculated as percentage of total income.

Exhibit 23: Core cost ratios remain elevated for SS&C Exhibit 24: EBITDA margin has compressed from peak levels
Technologies EBITDA and PBT margin, calendar year-ends, 2008-19 (%)
Core cost-to-income, calendar year-ends, 2008-19 (%)
EBITDA margin (% of revenues)
Core cost-to-income 45
90 40.2 39.5
87.5 36.5 37.5 36.8 36.6 37.4 36.9
35.2
36 33.2
86
83.5 28.9
26.7
27
82 80.5
77.7 80.3 18
78 76.8
75.2 75.7 74.7
74.3 73.9
76.3 9
74
0
70
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Notes:
Notes: (1) EBITDA includes other income and is calculated as percentage of
(1) Core cost-to-income: (Operating expenses+cost of revenues.
revenues)/(revenues)*100.

CAMS: LARGEST MF RTA IN A DUOPOLY; FOCUS ON PRODUCT DIVERSIFICATION

CAMS is India’s largest RTA (registrar and transfer agent) with ~70% market share in FY2020 (~72-73%
including the acquired business of Franklin Templeton from FY2022E). Along with its subsidiaries, it provides
various value-added services to mutual funds (in the form of an RTA), insurance companies, AIFs, banking and
non-banking companies along with other related stakeholders like distributors and investors. Its dominant
position in the MF RTA business (~70% market share in MF AAUM as of 3QFY21) drives a majority of revenues
(~87% of overall revenues in FY2020 was from mutual funds). CAMS’ dominant position in most business
segments is underpinned by its wide distribution reach, diverse product bouquet, domain expertise and
proprietary software and technology platforms.
CAMS is financial infrastructure service provider

CAMS, as an MF RTA, manages several operational and investor servicing-related
requirements of AMCs thereby enabling mutual fund houses to focus on design, sales and
fund management functions.
Apart from being the largest player in the MF RTA business with ~70% market share in MF
AAUMs as of December 2020 (~72-73% including AAUMs of Franklin Templeton which will
be transferred to CAMS gradually), CAMS provides a wide gamut of services to mutual fund
houses and other related stakeholders like distributors and investors. It additionally caters to
insurance companies, AIFs, banking and non-banking institutional clients also.
A dominant player in MF RTA industry, operates across multiple lines

CAMS, along with its subsidiaries, is organized across six other business verticals (apart from
MF RTA), viz. electronic payment collection services business, insurance services business,
alternate investment fund services business, banking and non-banking services business,
KYC registration agency business and software solutions business (Exhibit 25). The company
is, however, in the process of winding up its banking and non-banking services business.
Exhibit 25: Corporate structure for Computer Age Management Services (CAMS)
March fiscal year-end, 2QFY21
Computer Age Management Services Limited
Mutual funds services, alternate investment funds services, payment services

and banking and non-banking service businesses
Sterling Software
CAMS Insurance CAMS Investor Services CAMS Financial
Private Limited
Repository Services Private Limited Information Services
Limited Private Limited Software solutions
KYC registration agency
business
Insurance services business business Account aggregator business
Sterling Software
(Deutschland) GmbH
Notes:
(1) The company is currently in the process of winding down the operations of Sterling Software (Deutschland) GmbH.
(2) The company is currently in the process of closing banking and non-banking services business.
(3) All subsidiaries are wholly-owned.
Source: Company

Largest mutual fund registrar in India

CAMS is India’s largest registrar and transfer agent of mutual funds with an aggregate
market share of ~70 % as of December 2020 (market share of ~61% in FY2015), based on
mutual fund AAUM serviced by the company (Exhibit 26). Mutual fund clients include four
of the five largest mutual fund houses as well as nine of the top 15 largest mutual fund
houses in India based on MF AAUM as of December 2020. Additionally, the company has
entered into an agreement with Franklin Templeton who will transfer the management of
their RTA business to CAMS from 2HFY21E (earlier Franklin Templeton used to manage the
transfer agency business in-house).
 Market share likely to inch up. We expect CAMS’ market share to inch up a bit by
~100-200 bps going ahead (including the acquired business of Franklin Templeton).
Increase in market share will likely be driven by higher consolidation in the AMC space;
CAMS has tie-ups with the larger AMCs. Additionally, smaller players may be acquired by
larger AMCs which can further drive rise in market share. Increase in market share may
however translate to yield compression; impact of tiered fee structure. Additionally, it may
further decrease the negotiating power of CAMS as larger AMCs gain scale and
dominance.
 Wide product bouquet to various stakeholders in MF business. The company offers

a diversified bouquet of products to various stake holders of mutual fund houses. As a
result of the domain expertise, established processes, technology-driven infrastructure
and marquee clients, the company is well positioned to capitalize on incremental growth
opportunities in the sector (Exhibit 27).
Exhibit 26: CAMS has dominant share in MF AAUMs managed by RTAs

CAMS' market share in managed AAUM, March fiscal year-ends, 2015-20, 3QFY21 (%)
Market share in managed MF AAUM

75
70.0
69.0
70 67.6
63.9
65
62.4
60.5 60.3
60
55
50
2015 2016 2017 2018 2019 2020 3QFY21
Notes:
(1) Franklin Templeton has entered into an arrangement with CAMS to transfer its RTA business to the latter
from 2HFY21E. As of 3QFY21, CAMS had 70% market share and the business is yet to be transferred.
Source: Company, AMFI, CRISIL, Kotak Institutional Equities

Exhibit 27: CAMS offers a wide bouquet of products to various stakeholders in the mutual fund industry
Products offered under mutual fund business
Business Function/
segments application Brief description
Transaction origination services (both paper-based and electronic), including managing KYC requirements of investors
Transaction origination
(operated through a subsidiary).
CAMS is responsible for accepting and executing orders on behalf of mutual fund clients and provide transaction
processing and payments services. Additionally, perform record keeping functions and ensure that all records are stored
Operations
in a digital format on the servers. Finally, the company computes and process fees and commission payable by the
mutual funds to distributors and assist with the disbursement of such money.
Transfer agency
services CAMS accepts transaction requests from investors (in both physical and online modes), process the transaction and
Investor services sends transaction confirmation to investors and their distributors. The company also computes and pay the brokerage
fees and reconcile the bank accounts.
CAMS offer variety of services to mutual fund clients such as anti-money laundering services, reporting to government
Risk management
agencies and authorities such as the SEBI and suspicious transaction reporting.
CAMS assists mutual fund clients in complying with the scheme document requirements, KYC regulations, SEBI and tax
Compliance
requirements and generation of various statutory and non-statutory compliance reports.
CAMS provides plug and play services to new market entrants. The front offices act as a physical touch point for the
Front offices receipt, initial verification and processing of financial and non-financial transactions. As of 1QFY21, the company had
employed 1,242 employees at front offices.
Business process management: setting up of accounts, records management, maintenance functions, transaction
processing and reporting.
Back offices
Customer interaction: mail management, online customer service, SMS services and operations of a call center.
Intermediary services: on-boarding, enrolment services, fee computation and revenue administration.
Customer care Provides inbound and outbound call centre services to clients from centers established at Mumbai, New Delhi, Chennai
Call centres
services and Kolkata. Employees are trained in-house and assigned as dedicated resources to provide exclusive services to clients.
CAMS has set up exclusive touch points to handle all queries for mutual fund distributors. The company services
Distributor help desk distributor requests through emails and telephone calls. CAMS also provides several services through the help desk
including requests on brokerage structures, general queries, mail back services and brokerage amounts.
Push services: available across financial transactions such as for purchase and redemption.
Pull services: provide general information such as NAV as well as specific information about the portfolio.
Mobile based services
CAMS Online system: provides a comprehensive list of on-line and value added services to all participants of the mutual
fund industry.
CAMS offers distributors a service package to help them provide efficient services to their customers. To further enhance
Distributor
the services the company recently launched a mobile application, edge360, with several features enabling distributors to
services
service their investors more efficiently.
This is a B2C mobile application to facilitate retail mutual fund transactions. The application enables investors to create a
myCAMS new folio and works with other applications to allow investors to immediately start making SIPs in the mutual funds of
their choice. The number of myCAMS registered users have grown from to 3.3 mn in 1QFY21 from 0.2 mn as of FY2015.
CAMServ This application has a self-service chatbot to help investors navigate through mutual fund services and investing options.
This application was developed to service mutual funds and is a business intelligence service. It assists with reporting,
CAMSmart
predictive and prescriptive analytics, data mining, measuring business performance and benchmarking.
The application is designed for investors and distributors and has been developed to obtain minimal data input from
digiSIP existing investors thereby eliminating the process time required for separate mandate registration for each SIP. It helps
investors and distributors in setting up multiple SIPs at one time.
This application is a corporate investment portal designed for corporates. It provides a single gateway to transact across
multiple participating mutual funds and does away with the need to complete multiple forms and transaction slips. The
GoCORP
application allows corporates to schedule redemption transactions and allows same-day purchase and redemption
transaction.
Technology and
This is a proprietary front office investor service application and is targeted at mutual funds. The application allows mutual
mobile based Mf360
funds to track transactions, investor enquiries and account statement requests.
applications
This application assists in linking the transfer agent’s back offices with the mutual funds front office in real time, while
mfCompass offering a holistic and real time view of inflows and outflows to the fund managers. It allows quick reporting of physical
applications received through mutual fund branches with limited data encoding requirements.
This is a mobility solution for mutual fund relationship and sales managers to better manage investor relationships and
distributor performance. It provides real time access to funds data directly from the transfer agent’s database and industry
mfCRM
data from data aggregation service MFDEx. It enables a relationship manager to optimize time with the right investors
and prospects and target their communications appropriately
The application helps with the aggregation of mutual fund data with various parameters. It also allows sales and
MFDEx marketing teams to facilitate better alignment of resources through reviewing market performance, sales and distribution
effectiveness.
This application was developed for mutual fund distributors and advisors. It enables the tracking of brokerage for
edge360 transactions, with paid or unpaid details. It provides distributors the ability to view, track and manage portfolios of new,
active and dormant investors.
Source: Company

Growth in CAMS’ serviced MF AAUM to moderate over the medium term

We expect growth in served MF AAUMs to moderate to ~16% CAGR over FY2022-24E
from 23% CAGR during FY2015-20 owing to (1) pressure on fresh inflows for AMCs in
FY2021-22E, (2) higher redemptions driving tepid net inflows and (3) sluggishness in SIPs
(Exhibit 28). Likely gains in market share for larger AMCs may, however, provide some
upside; the same has not been factored in our estimates though.
CAMS delivered strong growth in serviced MF AAUM at 23% CAGR over FY2015-20 (up 19%
over FY2009-20). Strong rally in markets from FY2016-18 and higher consolidation with
gains in market share by larger players led to strong growth in MF AAUMs (industry AAUM
was up at 19% CAGR over FY2015-20 and 17% CAGR over FY2009-20).
 Vertical integration to augment MF product portfolio. CAMS has focused on

increasing bouquet of value-added services to be provided to various stakeholders in the
AMC space. The company has witnessed robust increase in overall user base of myCAMS
(its B2C application,~6 mn as of 9MFY21 compared to 3.3 mn in FY2020 and 0.2 mn in
FY2017). Overall transactions of CAMS have increased to 328 mn in FY2020 from 76 mn
in FY2019. In FY2020 (237 mn in 9MFY21, down 2% yoy), the company processed 238
mn SIP transactions compared to 192 mn in FY2019 and 46 mn in FY2017 (175 mn in
9MFY21; down 2% yoy). Overall SIP transactions processed will, however, likely moderate
a bit going ahead owing to weak retail sentiment. This is further facilitated by the
technology application ‘digiSIP’. Additionally, overall transactions on edge360 have
witnessed strong traction over the past few quarters (up 38% qoq in 2QFY21 and 75%
qoq in 3QFY21 on a low base).
Exhibit 28: Growth in MF AAUM serviced by CAMS to moderate from peak levels
MF AAUM serviced by CAMS, March fiscal year-ends, 2015-24E
(Rs tn) MF AAUM serviced (LHS) YoY (RHS)

(%)
35 40
33.7
28 29.8 32
24.3
21 20.7 24
15.1 15.5 16.3

14.6
14 16
10.5
7 8
6.6 7.9 10.3 13.8 15.8 18.1 20.1 24.9 28.8 33.5
0 0
2023E
2021E
2022E
2024E
2015
2016
2017
2018
2019
2020
Proprietary technology platforms, domain expertise and large scale of operations

provide competitive advantage for CAMS’ mutual fund business
CAMS is one of the largest financial infrastructure and services providers in a rapidly
growing mutual fund market. While AMCs may continue to have higher negotiating power,
CAMS will remain a dominant player in the MF ecosystem.
 Relationship with clients is sticky in nature. Client relationships are sticky with
average tenure of relationship with its top 10 clients is 19 years and 18 years with top
four mutual fund clients as of 3QFY21. Over the past five years, the company has lost
only one client as a result of the merger of such fund with another fund that was serviced
by a competitor.

 Wide distribution engine supports strong client base. CAMS has a wide pan-India
physical distribution network comprising 271 service centers across 25 states and
five union territories as of 3QFY21 and this is supported by call centers in four major
cities, four back offices including a disaster recovery site (with ~500 personnel), all
having real time connectivity, continuous availability and data replication and redundancy
capabilities. The company has tie-ups with four out of top five mutual fund houses and
nine out of top 15 mutual fund houses.
 Scalable technology-enabled systems. CAMS has competitive technological advantage

over peers owing to capability, functionality, integration and scalability of proprietary
platforms, which deliver breadth and quality of service alongside cost efficiencies. The
company handled 328 mn transactions in FY2020 (down 2% yoy in 9MFY21)
compared to 98 mn in FY2015. Continued investment in proprietary IT platforms
further strengthens competitive advantage. Technology-related spends were Rs604 mn in
FY2020 (12.8% of overall expenses) compared to Rs540 mn in FY2019 (10.7% of overall
expenses) and Rs608 mn in FY2018 (13.9% of overall expenses). The IT team has over
400 qualified IT professionals as of FY2020, who manage comprehensive proprietary IT
infrastructure, develop innovative products and ensure systems and data security, in
addition to offering 24x7 support to clients.
 CAMS has developed in-house technology platforms and owns Investrak.NET, a mutual
fund transfer agency platform, myCAMS, a mobile device investor interface application,
GoCORP, a distributor focused application, and MFDEx, a market intelligence
product/information database among many other services.
 The company has aggregate of over 275 TB data storage as of 1QFY21.
 Comprehensive risk management at the helm of the business model. CAMS

continuously monitors systems and processes and endeavor to not only benchmark them
against Indian competitors but also focuses on incorporating industry best practices and
technological advancements in overall operations. The company is focused on automating
processes and enhancing systems and risk management practices to ensure that all
obligations and regulatory requirements are fulfilled on a timely basis and without errors.
It has implemented cyber security and cyber resilience policy and established a technology
committee comprising eminent specialists from IIT Bombay and IIT Madras, as well as
from the banking industry.
Contribution of non-mutual fund business to overall revenues to remain low at

~10-15%
Apart from servicing mutual funds (including KYC registration agency service through its
subsidiary), CAMS also provides other services to insurers through one of its subsidiaries and
software solutions business through another subsidiary, Sterling Software (it provides IT
platforms to third parties apart from providing IT platform to CAMS for its core mutual fund
business). CAMS also provides RTA services to AIFs and provides electronic payment and
collection services (through the parent) (Exhibit 29).
Rising penetration of insurance companies, ease of regulation for AIFs and strong growth in
overall investor base will result in strong growth of the non-mutual fund businesses and
thereby business for CAMS from these clients will also scale up. While the company is in the
process of shutting down its bank/NBFC services business, it has applied for account
aggregator license. The share of non-mutual fund business was low at ~13% over FY2019-
20 and will likely remain muted at ~10%.

 Revenue contribution from non-MF segments to remain low at ~10%. The non-MF
business segment contributed ~13% of revenues in FY2020 (broadly stable yoy). However,
the pace of growth declined sharply in 9MFY21 (down around 25% yoy compared to flat
yoy trends in the MF segment) owing to pandemic-related disruptions and de-focusing
select segments like banking and non-banking financial services business. While the
company will continue to invest in expanding its product and service capabilities, we do
not envisage significant change in revenue contribution from these entities. As such, the
revenue contribution from the non-MF business segments is likely to remain low at ~10%.
 Rise in e-insurance policies will likely drive growth for insurance repository
business. As part of the insurance repository business, CAMS assists clients with agent
management, branch operations, processing new business applications, servicing policies
and other support functions. It assists clients with scrutinizing and processing applications,
coordinating training and onboarding of new insurance agents apart from back office
operations as well as physical infrastructure and facility management functions. According
to the CRISIL Report, the company had a market share of 39% in the insurance
repository business (based on e-insurance policies) in FY2018. With steady increase in
e-insurance policies (55% CAGR over FY2015-18) supported by regulatory push and
digital penetration, the repository business will likely maintain strong pace of growth. The
share of overall e-insurance policies to overall insurance policies is low at ~0.24% as of
FY2018.
 Key player in AIF RTA business. As part of the alternate investment fund services
business, CAMS services investors, manages records and does fund accounting and
reporting, among others. As of 3QFY21, the company had tie-ups with 82 alternate
investment funds (AIFs), having an aggregate of ~Rs159 bn in AAUM (Exhibit 30).
 Lessons from global players suggest that AIF RTAs provide the next lever for growth for
RTAs. Most AIFs expect RTAs to provide them customized solutions. While the
technological expertise is broadly similar to that of MF RTAs, yields are likely higher in
this business. While the overall revenues for AIFs RTAs are ~10% of overall revenues
for RTAs (including AIF and MF industry), the managed AUM is ~2-3%. Thus, a back-
of-the-envelope calculation suggests that yields in the AIF RTA business are ~4-5X that
of yields in the MF RTA segment. While the contribution from this segment to overall
revenues remains low for CAMS, it can be significant contributor to revenues going
ahead.
 KYC registration business taps into another oligopolistic market. CAMS Investor
Services Private Limited (CISPL) is one of the five entities to be granted a KYC registration
agency license by SEBI. CAMS maintains KYC records of investors, on behalf of
capital market intermediaries registered with SEBI, eliminating the need to repeat KYC
procedures. Online services for intermediaries include verification of PAN card details,
facilitating upload of new KYC data, entering data for new KYC applicants, scanning and
uploading KYC document and viewing and downloading KYC data maintained by CAMS
as well as other KYC registration agencies.
 Proprietary software business knits different diversified businesses. CAMS conducts

software solutions business through the subsidiary, Sterling Software. Sterling Software
owns, develops and maintains the technology solutions for mutual fund clients. It had a
technology team of ~428 personnel as of March 2020. The company has developed
in-house, Investrak.NET, a scalable mutual fund transfer agency platform, among others
like MFDEx, mfCompass, etc. This business segment assists with website designing and
development of other businesses and consumers, providing mobility solutions, performing
trend analysis, business intelligence and analytics-based services, and technical and
domain consulting services.

 Electronic payment and collection services. As part of the electronic payment

collection services business (services mutual funds through the parent), CAMS manages
end-to-end automated clearing house transaction and electronic clearance services (ECS)
and service mutual funds, non-banking financial companies and insurance companies.
The company provides these services through CAMSPay, which is a highly automated ECS
or National Automated Clearing House (NACH) platform that supports periodical or ad
hoc payments to be collected from customers electronically through the National Payment
Corporation of India’s (NPCI) ECS or NACH platform. The overall ECS and NACH
transactions were 93.3 mn in FY2020 (up 16% yoy) compared to 55.4 mn in FY2018
(Exhibit 31).
Exhibit 29: A wide bouquet of non-mutual fund based services

March fiscal year-end, 2020
Business Description Operating entity
Management of mandated transactions, including registering of mandates, initiation of collections,
Electronic payment collections
reconciliation and the related reporting services, for mutual funds, non-banking finance companies, CAMS (parent)
services business
banks and insurance companies
The business is operated through a subsidiary, CAMS Insurance Repository Services Limited. As part CAMS Insurance
Insurance service business of this business, the company assists clients with agent management, branch operations, processing Repository Services
new business applications, servicing policies and other permitted support functions. Limited (subsidiary)
Alternate investment fund As part of this business, the company services investors, manages records and performs fund
CAMS (parent)
services businesses accounting and reporting, among other services, for alternate investment and other types of funds.
Banking and non-banking In the banking and non-banking services business, the company offers digitization of account
CAMS (parent)
services business opening, facilitation of loan processing and back-office processing services to financial institutions.
The KYC registration agency business is operated through a subsidiary, CAMS Investor Services
Private Limited, which is one of five entities granted a KRA license by SEBI. The company maintains
KYC records of investors, on behalf of capital market intermediaries registered with SEBI, eliminating CAMS Investor
KYC registration agency
the need to repeat KYC procedures. Online services for intermediaries include verification of PAN card Services Private
business
details, facilitate uploading new KYC data, entering data for new KYC applicants, scanning and Limited (subsidiary)
uploading KYC documents and viewing and downloading KYC data maintained by the company as
well as other KYC registration agencies.
Sterling Software
The software solutions business is operated through a subsidiary, Sterling Software. Sterling Software Private Limited
owns, develops and maintains technology solutions for mutual fund clients as well as banks and (subsidiary) and its
Software solutions business
NBFCs and had a technology team of 362 personnel. Through the subsidiary, the company developed immediate subsidiary
Investrak.NET, a scalable mutual fund transfer agency platform, among others. Sterling Software
(Deutschland) GmbH
Source: Company

Exhibit 30: AIF client base has increased at a modest pace

AIF clients, March fiscal year-ends, 2017-20, 3QFY21
(#) AIF clients (LHS) YoY (RHS) (%)

100 50
42.9
80 40
60 30
19.7
40 20
10.0
20 10
42 60 66 79 82
0 0
2017 2018 2019 2020 3QFY21
Notes:
(1) As of 3QFY21, the company managed AUM of ~Rs159 bn.
Exhibit 31: Growth rate of transactions handled by CAMSpay has moderated from peak levels
Transactions handled by CAMSpay, March fiscal year-ends, 2017-20
ECS and NACH registrations and transactions (LHS) YoY (RHS)

(# mn) (%)
100 134.7 93.3 150
80.6
80 120
60 55.4 90
40 45.5 60
23.6
20 15.8 30
0 0
2017 2018 2019 2020

MARKET RISK, CHANGE IN REGULATIONS, CONCENTRATION AND OPERATING RISKS

Key risks for CAMS include (1) faster-than-expected yield compression due to faster digital adoption or
otherwise, (2) lower negotiating power due to high client concentration (top 5 clients drive ~67% of its
revenue for FY2020) and (3) operating risks including cyber-attacks. Additionally, weak financial savings, shift
to passives, volatility in capital markets and adverse regulations are endemic risks for the MF industry.
Faster-than-expected yield compression
 Persistent yield compression. CAMS has reported consistent and significant

compression in commission yields over the years – calculated yields have moderated to 3
bps in FY2020 from 6.4 bps in FY2009 and 4.5 bps in FY2015. We are building in a
further compression to 2.45 bps by FY2024E.
 CAMS has periodic negotiations with MFs. A significant proportion of CAMS’ revenue
is linked to MF AUMs managed by the company. AUMs are likely to increase over time
due to MTM gains and higher ticket size of transactions, with limited efforts for CAMS,
making case for yield compression for the company. CAMS’ agreements with MFs follow
a tiered structure but may be renegotiated downwards bilaterally. We believe the efforts
and expenses incurred by CAMS to service MFs will be an important point of discussion
even as majority of the RTA fees are linked to AUMs. A current duopoly structure in the
industry helps CAMS to some extent, in our view.
 Digital adoption benefits in the near term, but may get priced in. A faster-than-
expected shift to digital origination, though benefit in the near term, will likely prompt
MFs to negotiate down commissions over time. While overall transaction volumes
declined 2% yoy in 9MFY21, paper-based transaction volumes declined sharply around
20-40% yoy indicating a significant pick-up in volume of digital transactions, one of the
reasons for CAMS improved productivity in 9MFY21. A back-of-the-envelope calculation
(~30% of overall transaction volumes are paper-based for FY2020) suggests that digital
transactions were up ~10% yoy in 9MFY21. Market sources suggest that the lockdown
has prompted distributors to move to digital sourcing and servicing.
 Third-party platform may reduce RTAs role in origination. BSE and NSE have
developed MF platforms for distributors to purchase and redeem on behalf of their clients.
These platforms earn fees from mutual funds. A similar platform provided by CAMS does
not offer mutual funds serviced by K-Fin and hence has not been very successful. These
(BSE/NSE) platforms provide standardized data for transactions originated by them and
hence reduce the efforts of the RTA. In this regard, CAMS has made two arguments:
 Transaction origination is only one of RTAs’ functions; these platforms have no role in
the back office and reconciliation functions.
 This is a small segment with NSE and BSE’s total revenue from the MF platform at
around Rs500 mn (BSE’s revenues were Rs447 mn for FY2020 and it commanded
almost 85% of the market) in FY2020 versus revenue of MF RTA at ~Rs9 bn. The low
revenue pool suggest the low value-add of these platforms.
 CAMS will aggressively cut expenses over time, if the eventual scenario plays out.
While CAMS has been consistently working on improving productivity, its cost levels are
broadly fixed. The company has 271 service centers across the country as of 3QFY21; the
company, for now, has no plans to reduce the network. We believe that CAMS may be
prompted to eventually curtail expenses on its physical network, in case the above
scenario plays out. This may, however, put pressure on earnings in the interim.

High concentration risk; top 2 MFs drive ~35% of operational revenue

CAMS faces significant concentration risk with high contribution of top clients (~35% and
~67% of operational revenues were contributed by top 2 and 5 clients respectively in
FY2020 (Exhibit 32). The loss of one or more of its significant clients or a reduction in the
amount of business or fees it obtains from them or an adverse change in the determination
of the fees that it receive from them could have an adverse effect. CAMS’ reliance on a
select group of clients may also constrain its ability to negotiate arrangements, which may
have an impact on its profit margins and financial performance.
CAMS’ largest MF and two other mutual funds have been recently listed. We believe that
the listings will prompt these companies to focus on expenses, leading them to negotiate
harder with RTAs.
Exhibit 32: Top 2 players contribute ~36% of overall revenues for CAMS
RTA revenues from AMCs, March fiscal year-ends, 2017-20
2017 2018 2019 2020

RTA revenues from select AMCs (Rs mn)
Player 1 970 1,221 1,255 1,273
Player 2 709 931 1,123 1,217
Others 3,073 4,213 4,461 4,420
Overall revenues 4,751 6,365 6,839 6,910
Revenue share from top clients
Top 2 35 34 35 36
Top 5 67 67 67 67
Calculated MF AAUM (Rs bn)
Player 1 2,185 2,817 3,264 3,644
Player 2 2,243 2,880 3,137 3,486
Others 5,866 8,062 9,440 11,020
Overall MF AAUM 10,294 13,759 15,841 18,150
Calculated yields (bps)
Player 1 4.4 4.3 3.8 3.5
Player 2 3.2 3.2 3.6 3.5
Others 5.2 5.2 4.7 4.0
Overall 4.6 4.6 4.3 3.8
Notes:
(1) Calculated AAUM for HDFC AMC and NAM is average of MAAUM for quarter-ending months while it is
reported AAUM for the overall managed funds.
(2) (2) Player 1 and player 2 are largest AMCs in term of overall actively-managed equity oriented MAAUM as
of FY2020.
Source: Company, AMFI, Kotak Institutional Equities estimates
Operating risk, including risk of cyber attacks

CAMS indemnifies MFs of operating risk. CAMS’ contracts with its clients include provisions
pursuant to which it is liable to such client for losses, including any indirect or consequential
losses, arising in connection with error or omission, fraud, negligence or default caused by
CAMS, any of its employees or agent’s actions. Indemnity provisions in such contracts include,
among others, CAMS holding the client harmless from and against all such losses, damages,
injury liabilities, claims, actions, costs (including attorney’s fees and court fees) relating to
third-party claims arising out of or related to its performance or failure of the terms of such
contract for which it has assumed financial, administrative or operational responsibility.
The aggregate cumulative financial liability under some of these contracts ranges between
25% and 100% of the fees received by CAMS the client for a particular transaction or 12
months preceding the month in which such claim is made, as the case may be. However, in
the event of certain breaches, there is no limit on the liability that could incur under these
contracts. Also, one of its contracts with a mutual fund client does not have a cap on liability.
Further, validity of indemnities provided within a majority of the contracts with its clients ranges
between one year and five years from the expiry of such contracts. Such financial liability and
penalty may have an adverse effect on its business and reputation, including loss for clients.

The company incurred claims equivalent to 2% of revenues over FY2017-19. However, from
FY2020 onwards, CAMS transitioned to ad-hoc provisioning for claims compared to rule
based provisioning follower earlier. The board has fixed the threshold for claim based
provisions at Rs650 mn and as such incremental provision will be event based or ad-hoc.
Risk of cyber attacks. The size and complexity of CAMS’ computer systems may make
them potentially vulnerable to breakdowns. Its systems are vulnerable to attacks including
viruses, ransomware and spam attacks. The company has experienced cyber-security threats to
its information technology infrastructure and has experienced non-material cyber-attacks. For
example, the company experienced an attack by a Crysis/Dharma ransomware variant on the
web server hosting the marketing website of its subsidiary, SSPL, in December 2018 which
caused its data to get encrypted. This attack was contained and did not spread through
SSPL’s network or that of CAMS.
Regulations for RTAs
CAMS and other RTAs operate in a highly regulated environment in which it is regulated by
the SEBI, RBI, IRDAI and the MCA, among others. Accordingly, there are inherent legal and
regulatory risks in the business. As the company operates under licenses or registrations
obtained from appropriate regulators, it is subject to scrutiny, supervision and actions taken
by such regulators. The company is also exposed to the risk of any of its employees being
non-compliant with insider trading rules or engaging in fraudulent practices to take
advantage of its clients and their investors.
Risks for the MF industry: shift to passives, market risk and regulations
 Shift to passives may hasten yield compression. We believe that the rise of passive
funds will reduce inflows to actively managed equity-oriented funds and drive pressure on
yields in the Indian mutual fund industry (and also for CAMS). We expect industry-wide
share of ETFs to increase to ~33% of equity AUMS (actively managed equity-oriented
funds and ETFs) in FY2030E from 14% in FY2020. The share of non-gold ETFs from the
individual segment as proportion of overall equity AUMs will also increase over the same
period from trough levels of ~1% in FY2020. While the contribution of ETFs is currently
small, increasing investor awareness to focus on IRRs and concerns over consistent
underperformance of actively managed funds will likely drive a J-curve in ETF growth
trajectory. Recent underperformance of several actively managed equity-oriented funds
and lower outperformance of those which outperformed the benchmark has likely raised
concerns in the minds of retail investors. Developed market trends (US, Canada, Japan
and select European markets) suggest that fund underperformance over a five-year
bucket accelerates the pace of migration of ETF.
 Market risks in MFs. Mutual fund industry is vulnerable to the volatility in capital
markets. The AAUM of mutual funds may decline or fluctuate for various reasons, viz.
declines in the Indian equity markets, which could impact future equity flows as well. In
response to market conditions, inconsistent or poor investment performance, the pursuit
of other investment opportunities or other factors, investors may redeem or withdraw
their investments in funds. Income from mutual funds contributes ~87% of CAMS’
overall operational revenues. The revenue model of MF RTAs is interplay of (1) fees for
processing of new fund offer, (2) monthly asset bases fee (calculated basis MAAUM), (3)
mix of AUM serviced across asset classes (equity, debt, liquid, hybrid and others) as equity
funds tend to earn higher than others, (4) transaction fee, (5) application usage fee and
(6) call center fees. Hence, volatility in mutual fund AUMs can significantly affect CAMS’
earnings trajectory.

 Regulations for mutual funds. With large contribution of fees from mutual funds,
changes in regulations of mutual funds specifically regulating their income could in turn
affect the income of RTAs. Mutual funds are permitted to charge certain operating
expenses for managing a scheme such as sales and marketing/advertising expenses,
administrative expenses, transaction costs, investment management fees, registrar fees,
custodian fees and audit fees, as a percentage of the scheme’s daily net assets. Total
expense ratio (TER) charged to the scheme is the cost of running and managing a scheme.
All expenses incurred by a scheme are required to be managed by the asset management
company within the limits specified by SEBI’s MF Regulations. On September 18, 2018,
SEBI mandated, among others, that the TER for (1) equity oriented open schemes shall
range from 1.05% to 2.25%; and (2) other open schemes shall range from 0.80% to
2.00%, depending on the AUM of such scheme. SEBI mandated TER for close-ended
schemes, liquid schemes, index funds schemes, etc. as well.

YIELD PRESSURE AND SLOWER AUM GROWTH TO CRAMP EARNINGS TRAJECTORY

CAMS’ strong profitability (~40-44% RoE over FY2021-24E) is supported by low capital requirements with
inherently strong operating leverage of the RTA business (EBITDA margins of 41.4-43% during FY2021-24E).
Sluggish AUM growth, compression in yields (down to 2.45 bps in FY2024E from 3 bps in FY2020, further
declining from 4.5 bps in FY2015) will likely drive muted revenue growth (~10% CAGR during FY2022-24E, up
17% yoy in FY2022E, led by acquisition of Franklin Templeton’s RTA service) compared to 14% CAGR over
FY2017-20. The share of non-MF business remains low at 10-15% of revenue. A focus on expense management
and consistent productivity improvements will boost PAT growth to ~15% CAGR during the period.
PBT growth to moderate; cost efficiencies to support margin improvement

We expect CAMS’ PBT growth to be modest at 14% CAGR over FY2022-24E (up 16% yoy
in FY2022E due to acquisition of Franklin Templeton’s RTA service) compared to 16% CAGR
over FY2015-20 (lower at 10% CAGR over FY2017-20 due to one-off payouts) (Exhibit 33).
Slower growth in MF AAUM (16% CAGR over FY2022-24E compared to 23% CAGR over
FY2015-20; up 24% yoy in FY2022E and ~19-20% yoy adjusted for Franklin Templeton’s
service), gradual decline in yields in the MF business, steep decline in non-asset linked MF
revenues due to lower transactions and usage of value-added products and likely slower
pace of growth in revenues of the non-MF segments will put pressure on revenues.
Growth in expenses will taper down driving improvement in cost ratios, while investment in
technological initiatives and focus on product bouquet diversification will continue to offset
steep improvement in PBT margins. Overall, calculated PBT margins will increase to ~40% in
FY2024E from 35% in FY2020 (38% in FY2017).
 Revenue growth to moderate; cost control to support margins. We expect CAMS’

revenues to moderate to ~10% CAGR over FY2022-24E (up 17% yoy in FY2022E leading
to 12% CAGR over FY2021-24E) compared to 14% CAGR over FY2017-20 (flat yoy in
FY2020) on the back of decline in yields and slower pace of MF AAUM growth driving
moderation in pace of growth on AUM linked revenues (~60-65% of overall revenues)
(Exhibit 34). Stringent cost control, process automation, high share of contractual
employee providing flexibility to alter employee base (albeit with a lead lag effect) and
focus on reducing overheads and cost rationalization measures will, however, support
EBITDA margins; as such EBITDA margins are likely to expand to ~43% in FY2024E from
40% in FY2020 (41% in FY2017).
 Pace of MF AAUM growth to moderate. We expect tepid gross inflows and higher
redemptions to drive slower growth in MF AAUM serviced by CAMS at 16% CAGR over
FY2022-24E (up 24% yoy in FY2022E due to low base of FY2021E and acquisition of
Franklin Templeton’s MF RTA service) compared to 23% over FY2015-20 (Exhibit 35). We
build in broadly stable market share (~72-73% including business from Franklin
Templeton from FY2022E) though higher consolidation among AMCs and increasing
dominance of larger players can provide upside to our estimates. The MF business
contributed ~87% of CAMS’ operational revenues (FY2019 and FY2020); it increased to
~90% in 9MFY21 due to sharp decline in non-MF business volumes and gradual winding
up of the banking and non-banking financial services businesses. Its revenue growth is
interplay of (1) growth in serviced MF AAUM, (2) MF AAUM mix (as yields vary across
product classes) and (3) increase/decrease in yields, apart from other revenue streams like
fees for processing new fund offers, etc. Slower pace of growth in MF AAUMs will thus
put downward pressure on revenues.

 MF AAUM serviced by CAMS has increased at a robust pace of 25% CAGR over
FY2015-19 (24% CAGR over FY2017-19), higher than industry average of 21% CAGR
during the same period. AAUM growth moderated to 15% yoy in FY2020. The share
of high yielding equity-oriented AAUM increased to 39.3% in FY2019 (declined to 37%
in FY2020 due to MTM losses in 4QFY20) from 28.4% in FY2017 and 27% in FY2015.
This led to strong revenue growth at 20% CAGR over FY2017-19 (flat yoy in FY2020)
despite shrinkage in yields. The share of equity-oriented AAUM further moderated to
~34% in 9MFY21 due to weakness in capital markets early this year and high
redemptions driving high net outflows in recent months. We expect the share of high-
yielding equity-oriented AAUM to increase ~200 bps from trough levels to 36.5% in
FY2022E and marginally inch up to 37% by FY2024E.
 Yield compression to put further pressure on revenues. Yields charged by MF RTAs

are interplay of (1) fund size (AUM per scheme), (2) product mix (active equity-oriented
funds tend to garner highest yields while ETFs have the lowest) and (3) pricing power
based on negotiation of fees with different AMCs. We expect calculated yields (data
processing charges to MF AAUM serviced by CAMS) to decline to 2.9 bps in FY2021E
from 3 bps in FY2020 and further decline gradually to 2.45 bps by FY2024E (Exhibit 36).
Yield compression will be driven by (1) increase in fund size (CAMS has tie-ups with larger
AMCs), (2) increase in share of low-yielding ETFs and (3) fee renegotiation by larger
AMCs who face revenue headwinds. As such, growth in data processing revenues (~80%
of this is MF AAUM linked) will significantly lag growth in MF AAUM serviced by CAMS.
 Non-RTA revenues to witness tepid growth. We expect muted growth in non-RTA

revenues (from mutual funds and other segments) to grow at a muted pace of 8% CAGR
over FY2021-24E compared to 14% CAGR over FY2017-20 owing to (1) slowdown in
paper based transaction volumes driving lower customer care service charges, (2) cost
management by AMCs driving lower recoverable fees and (3) marginal moderation in
pace of growth of software and technology related fees. AUM linked revenues constitute
~80% of data processing charges (~35-40% of overall revenues).
 Share of other income to remain low at 3-4% of total income. The share of other
income to total income will likely remain low at 3-4% over FY2021-24E (low at 2-5%
over FY2017-19). Other income will likely report strong growth at 45% yoy in FY2021E
due to strong MTM gains but moderate thereafter from FY2022E. Volatilities in
investment gains and net gain/(loss) on financial assets are likely to persist.
 Growth in expenses to moderate, cost-to-income to remain elevated. We expect

growth in overall expenses to be muted over FY2021-24E at 10% CAGR (up 15% yoy in
FY2022E on a low base and ~8% CAGR over FY2022-24E) compared to 15% CAGR over
FY2017-20 (down 8% yoy in FY2020) (Exhibit 37). Consequently, cost-to-income will
likely decrease to 62.3% in FY2022E (down 260 bps yoy in FY2021E) and further
moderate to ~59.7% in FY2024E from 65% in FY2020. Slower pace of growth in
expenses will be interplay of (1) lower overall employee base due to weakness in fresh MF
inflows, transaction volumes and process automation driving productivity improvement;
CAMS has a variable employee model with 30% of overall employees being contractual
in nature, (2) focus on branch rationalization and slowdown in pace of business
expansion, (3) drop in claim-based provisioning and (4) focus on reducing overheads in an
environment of decreasing yields and slower growth in MF AAUM. Investment in
technology initiatives and diversification of product bouquet will however continue to put
pressure on expenses.

Exhibit 33: PBT margin to increase from trough levels

PBT growth and PBT margin (% of total income), March fiscal year-ends, 2017-24E
(%) PBT growth (LHS) PBT margin (RHS) (%)

40 50
40
38 39
38 37
30 40
34 35
28
20 30
10 20
20 25 9 16 15 13
0 10
(11)
(10) 0
2017 2018 2019 2020 2021E 2022E 2023E 2024E
Exhibit 34: Pace of revenue growth has declined

Revenues, March fiscal year-ends, 2017-24E
(Rs mn) Revenues (LHS) YoY (RHS) (%)

10,000 40
34
8,000 30
6,000 17 20
10 9
8
4,000 10
1 (0)
2,000 0
4,783 6,415 6,936 6,996 6,984 8,181 8,983 9,809

0 (10)
2017 2018 2019 2020 2021E 2022E 2023E 2024E

Exhibit 35: Pace of growth in MF AAUMs to moderate from peak levels

MF AAUM serviced by CAMS, March fiscal year-ends, 2015-24E
MF AAUM serviced by CAMS (LHS) YoY (RHS)

(Rs tn) 34 (%)
35 35
30
28 28
24
21
21 21
15 16
15 15
14 11 14
7 7
7 8 10 14 16 18 20 25 29 33
0 0
2015 2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E
Exhibit 36: Calculated yields in MF business will likely compress over the next few years
Yields, March fiscal year-ends, 2017-24E
(bps) Data processing charges to MF AAUM

5
4 3.7 3.6
3.4
3.0
2.9
3 2.7 2.6
2.5
0
2017 2018 2019 2020 2021E 2022E 2023E 2024E

Exhibit 37: Cost-to-income to decline from peak levels

Overall growth in expenses and cost-to-income, March fiscal year-ends, 2018-24E
(%) Operating expenses yoy (LHS) Cost-to-income (RHS)

(%)
45 75
72
30 71
15 66 65 67
38 18 63 15 8 7
0 63
(8) (3) 62 61
60
(15) 59
(30) 55
2018 2019 2020 2021E 2022E 2023E 2024E
Data processing fees dominate overall revenues
 MF RTA business drives majority of CAMS’ income. CAMS’ RTA income (98-99% of
revenues) comprises income from data processing (majority of it is linked to mutual fund
business), customer care services, recoverable, miscellaneous services and software license
fee, development and support services (Exhibit 38). The share of revenues from the MF
business to overall operational revenues is high at ~87% (FY2019 and FY2020); ~90% in
9MFY21. In 9MFY21, asset based revenues (~80% of MF revenues) was up 5% yoy while
non-asset based revenues were down 22% yoy and non-MF revenues declined 28% yoy.
We expect non-MF revenues to grow at a muted pace of 15% CAGR over FY2021-24E
(down 26% yoy in FY2021E) (Exhibit 39).
 Yield compression and lower AUM growth to drive decline in pace of growth of
data processing fees. Data processing fees which also include AUM linked fees from MF
business constitute significant proportion of overall revenues (78-80% of overall RTA
revenues) (Exhibit 40). Data processing is mostly AUM linked (~80%). Lower AUM growth
and yields compression (discussed earlier) will lead to moderation in pace of growth in
data processing fees. We build in ~10% CAGR in data processing fees from FY2022-24E
(up 4% yoy in FY2021E and 17% yoy in FY2022E; impact of low base and acquisition of
Franklin Templeton’s RTA business) compared to 13% CAGR in FY2017-20 (muted at 3%
yoy in FY2020); compression in yields and slower MF AAUM growth are key drivers
(Exhibit 41).
 The share of data processing fees to overall revenues is expected to inch up further to
82-84% over FY2021-24E owing to slowdown in non-MF linked business segments,
lower transaction linked fees and moderation in pace of revenues from value-added
services in the MF ecosystem (albeit lower base).

 Steep decline in customer care service charges. Customer care service charges
primarily comprise paper transaction volume-based fees and NACH (National Automated
Clearing House) volume-based fees from electronic payment collection services business.
We expect customer care service charges to remain stable over FY2021-24E at ~Rs580-
590 mn (down 6% yoy in FY2021E). Lower transaction volumes and likely to decline in
paper-based transactions owing to push towards digital platforms and will put pressure
on customer care service charges. While drop in paper based transaction volumes will put
downward pressure on revenues, strong traction in electronic payment transaction
volumes will provide some support (ECS and NACH transactions increased 16% yoy in
FY2020 and 45% yoy in FY2019). Even as revenues will likely decline, it will be somewhat
offset by lower data entry charges and drop in overall manpower. Customer care service
charges dropped 5% yoy in FY2020 and 8% yoy in FY2019 compared to strong 48% yoy
growth in FY2018.
 Recoverable to service charges ratio to remain stable. Recoverables comprise out-of-

pocket expenses incurred on behalf of mutual fund, AIF, insurance, banking and non-
banking clients and KYC details obtained from other KRAs. Growth in recoverables is
expected to decline a bit as AMCs focus on cost control. These revenues tend to move in
line with service charges and as such do not have any meaningful impact on the P&L. The
ratio of recoverable revenues to service charges has remained broadly stable at 0.97-
1.02X over FY2017-20; this is expected to remain stable at ~0.99X.
 Slowdown in revenues from miscellaneous services. Miscellaneous services comprise

revenues from call center services and fees for applications made available to clients.
Revenues from miscellaneous services will likely remain moderate over the next few years
to 10% CAGR over FY2022-24E compared to 21% CAGR over FY2017-20 (up 50% yoy
in FY2022E on a low base of 30% yoy decline in FY2021E).
 Growth in software license, development and other services to drop sharply.

Software license fee, development and support services comprises fee earned by the
subsidiary Sterling Software for providing services to external clients. The company
operates with a team of ~428 personnel and develops and maintains software and
technology platforms and internal and external stakeholders. With rapid digital
penetration to ease the process of client on-boarding, seamless data processing,
aggregation, information dissemination and other function, this segment delivered robust
growth in revenues at 74% CAGR over FY2017-19 prior to declining 11% yoy in FY2020.
We bake in modest 15% CAGR in software related fees (up 40% yoy in FY2022E on a
low base of ~40% yoy decline in FY2021E) owing to muted demand.
 Volatile trends in other income. Other income tends to be volatile and contribution to
total income is <5%. Other income will likely be high in FY2021E at ~Rs320 mn
compared to Rs220 mn in FY2020 (up 46% yoy in 9MFY21) due to Rs104 mn of gain on
sale of investment booked in 1QFY21 (Rs 6 mn in 1QFY20). Other income was up 16%
yoy in FY2020; it however declined 10% and 18% yoy in FY2019 and FY2018
respectively. We expect 9% CAGR in other income over FY2021-24E (Exhibit 42).

Exhibit 38: ~75-80% of overall revenues is data processing charges

Income composition for CAMS, March fiscal year-ends, 2017-24E
2017 2018 2019 2020 2021E 2022E 2023E 2024E Description
Income streams (Rs mn)
RTA services 4,751 6,365 6,839 6,910 6,932 8,108 8,899 9,713
Data processing 3,791 4,935 5,350 5,534 5,777 6,730 7,455
Mostly includes
8,200AUM linked fees from MF business (~80-90%).
Paper transaction volume-based fees and
Customer care services 480 712 657 625 587 581 583 585 volume-based fees from electronic payment
collection services business.
Includes out-of-pocket expenses incurred on
behalf of mutual fund, AIF, insurance, banking
Recoverable 262 411 480 363 297 391 413 435
and non-banking clients and KYC details
obtained from other KRAs.
Comprises revenues from call center services
Miscellaeneous services 218 308 353 388 271 407 448 493 and fees for applications made available to
clients.
Software license fee, development and
support services comprises fee earned by the
subsidiary Sterling Software for providing
services to external clients.
Other income 243 163 182 217 317 223 329 408
Total income 5,026 6,578 7,118 7,213 7,301 8,404 9,312 10,217
Key ratios (%)
Data processing fees to equity-oriented MF AAUM (bps) 13.0 10.1 8.6 8.3 8.3 7.4 7.0 6.6
Overall MF revenues to MF AAUM (bps) NA NA 3.8 3.4 3.1 3.0 2.8 2.6
Income growth rates (%)
Revenue from operations NA 34.1 8.1 0.9 (0.2) 17.1 9.8 9.2
RTA services NA 34.0 7.5 1.0 0.3 17.0 9.8 9.1
Data processing NA 30.2 8.4 3.4 4.4 16.5 10.8 10.0
Customer care services NA 48.2 (7.8) (4.7) (6.2) (1.1) 0.5 0.3
Recoverable NA 56.9 16.7 (24.4) (18.2) 31.7 5.6 5.4
Miscellaeneous services NA 40.9 14.7 9.9 (30.0) 50.0 10.0 10.0
Software license fee, development and other services NA 57.3 93.3 (11.0) (40.0) 40.0 15.0 15.0
Other income NA (33.1) 11.5 19.5 45.8 (29.6) 47.7 23.9
Total income NA 30.9 8.2 1.3 1.2 15.1 10.8 9.7
Income break-up (% of total income)
Total income 100 100 100 100 100 100 100 100
Revenue from operations 95 98 97 97 96 97 96 96
RTA services 95 97 96 96 95 96 96 95
Data processing 75 75 75 77 79 80 80 80
Customer care services 10 11 9 9 8 7 6 6
Recoverable 5 6 7 5 4 5 4 4
Miscellaeneous services 4 5 5 5 4 5 5 5
Other income 5 2 3 3 4 3 4 4

Exhibit 39: Share of MF revenues to remain high at 89-90% Exhibit 40: Data processing charges dominate revenues from
MF and non-MF revenues, March fiscal year-ends, 2019-24E (%) RTA services
RTA revenue mix for CAMS, March fiscal year-ends, 2017-24E (%)
MF revenues yoy (LHS)
Non-MF revenues yoy (RHS) Data processing Customer care services
Share of MF revenues to overall revenues (RHS) Recoverable Miscellaeneous services
(%)
60 91.0 3.9
100 4.6 4.8 5.2 5.6 5.0 5.0 5.1
5.5 6.5 7.0 5.2 4.3 4.8 4.6 4.5
40 90.4 89.8 10.1 8.5 7.2 6.6 6.0
90.1 11.2 9.6 9.1
89.9 80
20.2 89.6
20 12.6 11.9 88.6
60
1.0 3.7 16.8 9.5 8.9
0 87.4
(0.2) 40
86.8 86.9
(20) 86.2
20
(26.2)
(40) 85.0 79.8 77.5 78.2 80.1 83.3 83.0 83.8 84.4
2019 2020 2021E 2022E 2023E 2024E 0
2017 2018 2019 2020 2021E 2022E 2023 2024E
Exhibit 41: Growth in data processing fees to lag MF AAUM growth

Growth in data processing fees and serviced MF AAUM for CAMS, March fiscal year-ends, 2018-24E (%)
Data processing fees yoy MF AAUM yoy

40
30
20
33.7
30.2
24.3
10
15.1 14.6 16.5 15.5 16.3
8.4 10.5 10.8 10.0
3.4 4.4
0
(10)
2018 2019 2020 2021E 2022E 2023 2024E

Exhibit 42: Other income tends to be volatile

Other income for CAMS, March fiscal year-ends, 2017-24E
(Rs mn) Other income (LHS) YoY (RHS) (%)

400 60
46 48
320 40
24
20
240 12 20
160 0
80 (30) -20
(33)
243 163 182 217 317 223 329 408
0 -40
2017 2018 2019 2020 2021E 2022E 2023E 2024E
Expense moderation to offset sluggish topline; cost ratios to decrease from peak
levels
In our view, CAMS will focus on stringent expense control to offset likely pressure on
sluggish revenue growth. We expect overall expenses growth to remain muted over the
medium term at 10% CAGR over FY2021-24E (down 3% yoy and FY2021E and up 15%
yoy in FY2022E on a low base) compared to 15% CAGR over FY2017-20 (down 8% yoy in
FY2020 on a high base in FY2019 due to one-off payouts) (Exhibit 43).
We expect to see the pace of growth of expenses slow down on account of several factors:
(1) branch rationalization coupled with slowdown in business expansion, (2) lower overall
employee base as overall transaction volumes moderate and process automation picks up,
(3) focus on reducing overheads, (4) lower service charges as AMCs focus on cost
rationalization (this will however be counter-balanced by lower recoverable) and (5) decline
in claims (the company started to incur provisions for claims on an ad-hoc basis from
FY2020 compared to 2% of revenues earlier). Investment in technology-related initiatives,
diversification of product bouquet and scaling up new business lines will however remain
high. Employee expenses dominate overall expense mix at ~50-55% (Exhibit 44).
 Drop in overall employee base to support moderation in employee expenses. We

expect employee expenses to be muted at 5% CAGR over FY2022-24E (up 17% yoy in
FY2022E on a low base of FY2021E) compared to 16% CAGR over FY2017-20 (down 6%
yoy in FY2020) as operating efficiencies increase(Exhibit 45). The company is focused on
improving productivity of its existing employee base and infrastructure through various
process automation initiatives. Of the overall employee base of 6,163 as of 1QFY21,
~4,697 are involved in customer servicing of which 1,242 are employee in front offices
and the remaining 3,455 in back offices. Additionally, a high proportion of employees are
contractual (~30%) in nature. This provides flexibility to the business model to alter its
employee structure in case of sharp volatilities in transaction volumes albeit with a lead-
lag impact.

 FY2018 witnessed highest actively managed equity-oriented inflows over the past
decade. Overall closing employee base was high at 8,297 for CAMS compared to
5,986 in FY2017. As inflows started to moderate, overall employee base declined to
7,025 in September 2018 and 6,600 in March 2019. It further dropped to 6,453 in
March 2020 and 6,163 as of June 2020. Manpower charges (~17-22% of employee
expenses over FY2017-20 and is mostly related to payout for contractual employees)
declined 17% yoy in FY2020 (Exhibit 46). We expect further moderation in overall
employee base to 6,203 in FY2024E from ~6,250 in FY2021; process automation will
drive efficiencies while cost per employee will likely remain flat (Exhibit 47).
 Lower data entry charges and provision for claims to drive slower growth in
operating expenses. We expect operating expenses to moderate to 7% CAGR over
FY2022-24E (up 16% yoy in FY2022E on a low base of 7% yoy decline in FY2021E)
compared to 11% CAGR over FY2017-20 (down 18% yoy in FY2020 on a high base in
FY2020 due to one-off payouts to center heads and change in recognition for provision
for claims from FY2020) (Exhibits 48 and 49). Slowdown in pace of growth of operating
expenses is likely to be interplay of (1) lower service charges (as AMCs focus on cost
rationalization), (2) decline in data entry charges due to lower paper-based transaction
volumes and (3) drop in provisions for claims (claims are realized on an ad-hoc basis from
FY2020 compared to 2% of revenues earlier; as such, the board has fixed the threshold
for claim based provisions at Rs650 mn).
 Data entry charges, which are primarily incurred for processing paper-based
applications in the mutual fund services business, dropped sharply in FY2019 and
FY2020 (down 42% yoy in FY2019 and 20% yoy in FY2020) owing to lower paper-
based transaction volumes. This is expected to significantly decline in FY2021E due to
Covid-19 related restrictions driving lower footfall across branches prior to picking up
marginally from FY2022E; this is however expected to remain significantly lower than
historical levels. Lower data entry volumes will also drive lower manpower. This is in
line with the overall strategy to digitize transactions.
 Claims, which are incurred on account of claims raised against CAMS as well as funds
set aside by the company through a charge in the statement of profit and loss to
provide for future claims dropped in FY2020 (down 13% yoy) owing to change in limit
for provisions (as discussed above). We expect claims to remain broadly stable at
Rs140-160 mn (~15-20% of operating expenses).
 Customer service center charges, which are expenses primarily associated with
management of service centers and payment of fees to center heads are expected to
grow at a modest pace (~15% CAGR) over FY2022-24E. Gradual increase in MF
AAUMs will drive increasing requirements for customer care services, though focus on
improving productivity will support overall expense growth.
 Service charges, which are primarily out of pocket expenses incurred for
communication services to investors or distributors, stationery and postage on behalf
of mutual fund, KYC, insurance and banking and non-banking clients will likely grow
at a muted pace as AMCs focus on cost rationalization. As such, this expense items is
recovered from the AMCs and does not have any meaningful impact on P&L.
 Software expenses primarily include expenses to maintain software and hardware assets
of the company and expenses incurred to improve cyber security. This is expected to
grow at a robust pace (up ~7% CAGR over FY2022-24E and up 10% yoy in FY2022E
on a flat yoy growth in FY2021E); albeit lower than historical levels, as the company
will likely focus on augmenting its IT capabilities. Software expenses increased at a strong
pace of 45% CAGR over FY2017-20 (up 13% yoy in FY2020) owing to purchase of new
software licenses purchased during the period, investment in applications to enhance
cyber-security and technology related spends incurred to improve information technology
capabilities to handle a higher volume of transactions. Overall technology-related expenses
increased sharply at 19% CAGR over FY2017-20 (up 12% yoy in FY2020) (Exhibit 50).

 Focus on reducing overheads though headroom for improvement is marginal. We

build in 20% CAGR in other expenses over FY2022-24E (up 25% yoy in FY2022E on a
low base of 11% yoy decline in FY2021E) compared to 11% CAGR over FY2017-20
(down 3% yoy in FY2020). While the company will continue to focus on reducing
overheads and improving productivity, a high fixed cost (apart from employee expenses)
model does not leave much headroom for improvement.
 Cost-to-income drop from peak levels. We expect cost-to-income ratio to decline from
peak levels to ~62% in FY2022E and further moderate to ~60% in FY2024E compared to
65-72% over FY2018-20 (Exhibit 51). Stringent cost control measures will marginally be
offset by investment in technology initiatives, diversification of products and services and
tepid growth in overall revenues suppressing sharp improvement in cost ratios. Global
players like SS&C Technologies continue to invest in new technologies to diversify product
bouquet apart from inorganic activities. Over CY2014-19, growth in cost for SS&C
Technologies was marginally higher than growth in overall revenues.
Other highlights
 Goodwill of Rs1.3 bn. CAMS has goodwill of Rs1.3 bn in its book. The company does
not amortize the goodwill though it is tested for impairments on an annual basis.
 ESOP dilution at <2%. We bake-in ~1.5% dilution due to ESOP over FY2021-24E. We
have assumed a vesting period of 4 years.
 Expect stable dividend payout ratio of 65%. We expect payout ratio to remain high at
65% over FY2022-24E (higher at 125% in FY2021E due to one-time special dividend,
adjusted payout ratio of ~64%).
Exhibit 43: Overall expenses growth to remain tepid Exhibit 44: Employee expenses dominate overall expense mix
Overall expenses, March fiscal year-ends, 2017-24E Overall expense mix, March fiscal year-ends, 2017-24E
Overall expenses (LHS) YoY (RHS) Other expense Finance cost

(Rs mn) (%) Operating expense Depreciation and amortization
37.6
7,000 40 Employee benefits expense
(%)
100
5,600 30 18.0 16.3 15.6 16.4 15.1 16.5 18.2 20.4
0.0 0.1 0.1 0.0 1.7 0.0 0.0
18.5 80 0.0
20.1 21.8 20.7 18.4 17.6 17.8 17.5 17.4
4,200 14.6 20
60 9.9 10.3 9.5 8.5 8.4 8.2
8.5 9.7 9.3
7.3
2,800 10
40
(2.8)
1,400 0
20
(7.9)
3,134 4,312 5,109 4,706 4,572 5,239 5,683 6,099 52.1 52.5 53.7 54.8 56.0 57.2 55.8 53.9
0 (10) 0
2021E
2022E
2023E
2024E
2017
2018
2019
2020
2021E
2022E
2023E
2024E
2017
2018
2019
2020
Notes:
(1) Overall expenses include depreciation and amortization expense Source: Company, Kotak Institutional Equities estimates
and finance cost.

Exhibit 45: Employee expenses have moderated from peak Exhibit 46: Drop in contractual employee has led to decline in
levels share of manpower charges to overall employee expenses
Employee expenses, March fiscal year-ends, 2017-24E Employee expense mix, March fiscal year-ends, 2017-20
Employee benefits expenses (LHS) YoY (RHS) (%) Salaries, wages and bonus Manpower charges
(Rs mn) (%) 100
3,500 38.5 40 10.2 10.7 8.6 10.4
3,288 19.7 17.3
3,170 80 20.9 21.6
2,800 21.3 2,995 30
2,746
2,580 2,562
2,100 16.9 20 60
2,263
1,400 1,634 5.8 10 40

3.7
(0.7)
700 0 20
(6.1)
68.8 67.8 71.6 72.3
0 -10 0
2017
2018
2019
2020
2021E
2022E
2023E
2024E
2017
2018
2020
2019

Exhibit 47: Overall employee base likely to shrink further

Employees and cost per employee, March fiscal year-ends, 2018-24E
Cost per employee (LHS) Employees yoy (RHS)

(Rs mn) (%)
0.55 88
0.44 66
38.6
0.33 44
0.51 0.53
0.48
0.22 22
0.39 0.40
0.37
0.32 (0.4) (0.4) -
(3.1) (3.1)
0.11 0
(19.7)
0.00 (22)
2018 2019 2020 2021E 2022E 2023E 2024E

Exhibit 48: Growth in operating expenses to remain muted Exhibit 49: Share of service charges will likely increase
Operating expenses, March fiscal year-ends, 2017-24E Operating expense mix, March fiscal year-ends, 2017-24E
Operating expense (LHS) YoY (RHS) Service charges

(Rs mn) Data entry charges
(%)
1,100 60 Customer service centre charges
49.2 Claims
(%) Software expenses
100
880 40
15.9 80 40.9 42.7 37.2 42.3 41.8 41.3

44.3 46.8
660 12.5 20
6.8 6.7
60 7.0
12.3 7.5 6.8 6.5 6.2
440 (7.0) 0 10.5 15.8
16.6 18.2
40 15.0 15.7 16.9
(18.2) 19.4
14.1
13.5 19.5
220 (20) 15.8 15.8 15.3 14.8
20 18.8 14.5 14.8
631 941 1,058 866 805 934 997 1,064 8.6 11.1 13.8 19.0 20.5 19.4 19.5 19.5
0 (40) 0
2021E
2022E
2023E
2024E
2017
2018
2019
2020
2021E
2022E
2023E
2024E
2017
2018
2019
2020
Source: Company, Kotak Institutional Equities estimates Source: Company, Kotak Institutional Equities estimates
Exhibit 50: Technology related spends at 10-15% of overall expenses

Technology related spends, March fiscal year-ends, 2017-20
Overall technology related spend (LHS) Technology related spend to overall expenses (RHS)
(Rs mn) (%)
14.0
650 14.0
520 13.3
12.8
390 12.6
260 11.9
11.3
130 11.2
356 603 540 604

0 10.6 10.5
2017 2018 2019 2020

Exhibit 51: Cost ratios to reduce over medium term

Cost ratios, March fiscal year-ends, 2017-24E
(%) Cost-to-income (LHS) Cost-to-average MF AAUM

(bps)
75 3.5
3.2
3.1
3.0
60 3.1
45 2.6 2.7
2.3
30 2.1 2.3
2.0
1.8
15 1.9
62.4 65.6 71.8 65.2 62.6 62.3 61.0 59.7

0 1.5
2017 2018 2019 2020 2021E 2022E 2023E 2024E

Exhibit 52: CAMS – key growth rates and ratios

2017 2018 2019 2020 2021E 2022E 2023E 2024E
Key income statement growth rates (%)
Revenue from operations NA 34 8 1 (0) 17 10 9
RTA services NA 34 7 1 0 17 10 9
Data processing fees NA 30 8 3 4 16 11 10
Customer care services NA 48 (8) (5) (6) (1) 1 0
Others NA 50 16 (10) (24) 40 8 8
Software, license and development fees NA 57 93 (11) (40) 40 15 15
Other income NA (33) 12 20 46 (30) 48 24
Total income NA 31 8 1 1 15 11 10
Overall expenses NA 38 18 (8) (3) 15 8 7
Employee benefits expenses NA 38 21 (6) (1) 17 6 4
Operating expenses NA 49 12 (18) (7) 16 7 7
Claims NA 15 15 (12) 15 (6) 4 3
Other operating expenses NA 57 12 (19) (11) 21 7 7
Others NA 27 18 (3) (4) 9 16 15
EBITDA (excluding other income) NA 28 (7) 19 5 16 12 11
Profit before tax NA 20 (11) 25 9 16 15 13
Profit after tax post-minority interest NA 18 (11) 33 18 15 15 13
Key balance sheet growth rates
Cash and cash equivalents NA 81 57 16 100 (10) 5 5
Investment NA (2) 7 32 7 27 26 22
Fixed assets (including intangibles) NA 23 (1) (7) (6) 12 4 6
Net assets NA 19 6 9 6 14 14 14
Total liabilities NA 50 16 (8) 37 7 7 7
Shareholders' funds (pre-minority interest) NA 7 (1) 22 (9) 19 18 17
Other key growth rates/ratios (%)
Growth in overall MF AAUM handled 30 34 15 15 11 24 15 16
Share of equity-oriented MF AAUM handled 28 36 39 37 35 37 37 37
Growth in overall MF transaction handled 32 65 25 5 (2) 5 5 5
Growth in SIP transactions processed 33 58 45 24 (1) 12 7 7
Key ratios
Revenues from MF business to overall revenue from operations (%) NA NA 86.8 86.9 90.4 90.1 89.9 89.6
Customer care services to overall MF transactions (Rs) 3.2 2.8 2.1 1.9 1.8 1.7 1.6 1.6
Other income to total income (%) 4.8 2.5 2.6 3.0 4.3 2.7 3.5 4.0
Employee benefits expenses to overall expenses (%) 52.1 52.5 53.7 54.8 56.0 57.2 55.8 53.9
Service charges to recoverable (X) 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0
Cost-to-income (%) 62.4 65.6 71.8 65.2 62.6 62.3 61.0 59.7
Cost-to-MF AAUM (bps) 3.0 3.1 3.2 2.6 2.3 2.1 2.0 1.8
EBITDA margin (% of revenues) 40.9 39.1 33.6 39.7 41.9 41.4 42.1 43.0
ROE (%) NA 34.1 29.5 35.4 39.7 43.9 42.4 40.8
Tax rate (%) 34.3 35.4 34.8 30.8 25.2 25.6 25.6 25.6
Income statement common-size (% of total income)
Total income 100 100 100 100 100 100 100 100
Revenue from operations 95 98 97 97 96 97 96 96
RTA services 95 97 96 96 95 96 96 95
Data processing 75 75 75 77 79 80 80 80
Recoverable 5 6 7 5 4 5 4 4
Miscellaneous services 4 5 5 5 4 5 5 5
Other income 5 2 3 3 4 3 4 4
Overall expenses 62 66 72 65 63 62 61 60
Employee benefits expenses 52 52 54 55 56 57 56 54
Other expenses 11 11 11 11 9 10 11 12
Others (1) 2 7 (0) (3) (5) (6) (6)
Profit before tax 38 34 28 35 37 38 39 40
Tax 13 12 10 11 9 10 10 10
Profit after tax post-minority interest 25 22 18 24 28 28 29 30
Notes:
(1) All ratios are annualised.

Exhibit 53: CAMS – financial summary

2017 2018 2019 2020 2021E 2022E 2023E 2024E

Income statement (Rs mn)
RTA services 4,751 6,365 6,839 6,910 6,932 8,108 8,899 9,713
Data processing 3,791 4,935 5,350 5,534 5,777 6,730 7,455 8,200
Recoverable 262 411 480 363 297 391 413 435
Miscellaeneous services 218 308 353 388 271 407 448 493
Other income 243 163 182 217 317 223 329 408
Total income 5,026 6,578 7,118 7,213 7,301 8,404 9,312 10,217
Overall expenses (3,134) (4,312) (5,109) (4,706) (4,572) (5,239) (5,683) (6,099)
Employee benefits expenses (1,634) (2,263) (2,746) (2,580) (2,562) (2,995) (3,170) (3,288)
Depreciation and amortization expense (does not include amortization
(306) of non-compete
(402) fees) (504) (485) (434) (446) (480) (503)
Operating expenses (631) (941) (1,058) (866) (805) (934) (997) (1,064)
Service charges (258) (417) (496) (369) (300) (395) (417) (439)
Data entry charges (78) (156) (111) (65) (56) (64) (65) (66)
Customer service centre charges (123) (127) (149) (130) (127) (147) (168) (194)
Claims (118) (137) (157) (137) (157) (147) (153) (157)
Provision for claims (95) (128) (137) (13)
Others (23) (9) (20) (124)
Software expenses (54) (104) (146) (165) (165) (181) (194) (208)
Finance cost (1) (3) (3) (2) (80) (2) (2) (2)
Other expenses (563) (703) (798) (772) (690) (863) (1,035) (1,242)
EBITDA excluding other income 1,955 2,508 2,334 2,778 2,927 3,389 3,781 4,215
Profit before tax 1,892 2,266 2,009 2,508 2,729 3,165 3,629 4,118
Tax (650) (803) (700) (773) (688) (810) (929) (1,054)
PAT 1,242 1,463 1,309 1,735 2,041 2,355 2,700 3,064
Minority interest 7 4 4 0 1 1 1 1
PAT post minority interest 1,235 1,459 1,304 1,734 2,040 2,354 2,699 3,063
Balance sheet (Rs mn)
Cash and cash equivalents 153 277 435 505 1,009 908 954 1,001
Trade receivables 119 225 270 320 333 346 360 375
Investment 2,223 2,182 2,325 3,061 3,272 4,164 5,250 6,409
Loans 88 127 123 129 154 185 222 267
Current tax assets (net) — — — 150 50 50 50 50
Deferred tax assets (net) 90 138 202 83 50 50 50 50
Other financial assets 1 14 4 60 50 50 50 50
Fixed assets 2,626 3,235 3,200 2,985 2,804 3,136 3,259 3,449
Property,plant and equipment 1,243 1,770 1,682 1,538 1,343 1,572 1,618 1,725
Intangible assets 1,383 1,466 1,518 1,447 1,461 1,564 1,642 1,724
Other assets 550 781 804 732 769 807 847 890
Net assets 5,848 6,979 7,363 8,025 8,491 9,696 11,043 12,540
Trade payables 281 336 350 360 540 594 653 718
Provisions 492 646 882 839 1,049 1,154 1,270 1,397
Current tax liabilities 48 11 19 - 10 10 10 10
Other liabilities 820 1,473 1,617 1,428 1,999 2,099 2,204 2,314
Total liabilities 1,640 2,466 2,869 2,627 3,598 3,857 4,137 4,439
Equity share capital 488 488 488 488 488 489 491 493
Reserves and surplus 3,639 3,948 3,925 4,911 4,400 5,345 6,410 7,603
Shareholders' funds 4,127 4,435 4,413 5,398 4,888 5,834 6,901 8,096
Minority interest 82 77 82 — 5 5 5 5
Shareholders' funds post-minority interest 4,208 4,512 4,494 5,398 4,893 5,839 6,906 8,101
Total liabilities and shareholders' funds 5,849 6,979 7,363 8,025 8,491 9,696 11,043 12,540
Other key items
MF AAUM serviced (Rs bn) 10,294 13,759 15,841 18,150 20,059 24,924 28,784 33,469
Equity-oriented MF AAUM serviced (Rs bn) 2,921 4,885 6,233 6,707 6,920 9,097 10,578 12,383
Overall transactions handled (# mn) 152 250 313 328 324 340 357 375
SIP transactions processed (# mn) 84 132 192 238 235 263 282 302
Cah flow analysis (Rs mn)
Operating cash flows (excluding WC changes) 1,942 1,611 2,292 1,840 2,630 2,898 3,299 3,712
Changes in working capital/other adjustments 17 24 (411) 49 10 (13) (17) (21)
Capital expenditure (1,016) (428) (351) (151) 334 (393) (78) (184)
Free cash flow 942 1,207 1,529 1,737 2,974 2,492 3,204 3,507

ABOUT THE COMPANY

CAMS is a technology-driven financial infrastructure and services provider company targeted
at catering to various needs of mutual fund houses, other financial institutions and related
stakeholders like distributors and investors/policyholders. CAMS, along with its subsidiaries,
is organized across six other business verticals (apart from MF RTA), viz. electronic payment
collection services business, insurance services business, alternate investment fund services
business, banking and non-banking services business, KYC registration agency business and
software solutions business.
With the initiative of creating an end-to-end value chain of services, the company has grown
its service offerings for mutual fund houses and currently provides a comprehensive portfolio
of technology-based services, such as transaction origination interface, transaction execution,
payment, settlement and reconciliation, dividend processing, investor interface, record
keeping, report generation, intermediary empanelment and brokerage computation and
compliance related services, through a pan-India network of 271 centers. Apart from
servicing mutual fund house, CAMS also services alternative investment funds, insurance
companies, banks and non-banking finance companies. These centers are supported by call
centers in four major cities, four back offices including a disaster recovery site, all having real
time connectivity, continuous availability and data replication and redundancy.
The company has over two decades of experience and is India’s largest registrar and transfer
agent for mutual funds with an aggregate market share of ~70% (December2020), based
on MF AAUM managed by clients who are serviced by the company (post the agreement
between CAMS and Franklin Templeton whereby the latter will transfer the RTA business to
CAMS, CAMS’ market share in managed MF AAUM will increase to ~72-73%. Market share
has increased over the past four years to ~70% as of 3QFY21 from ~61% in FY2015.
A strong clientele in a duopoly market, high switching cost for clients owing to high initial
fixed capital requirements and strong domain expertise provide competitive advantage.
Mutual fund clients include four of the five largest mutual funds as well as nine of the 15
largest mutual funds based on AAUM during December 2020, according to the CRISIL
Report (excluding Franklin Templeton). However, high concentration of top MFs (>83% of
AUMs with top 10 players) lowers pricing power of RTAs.
Exhibit 54: Promoter holds 31% in the company

Shareholding pattern for CAMS, March fiscal year-end, 3QFY21
3QFY21
Shares Shareholding
(# mn) (%)
Promoter 15.1 31.0
Great Terrain 15.1 31.0
Public shareholders 33.7 69.0
Mutual funds 6.8 14.0
HDFC 2.9 6.0
HDFC Bank 1.6 3.3
Foreign portfolio investors 10.8 22.1
Faering Capital India Evolving Fund II 0.9 1.9
IIFL Private Equity Fund Series IA 1.0 2.1
Faering Capital India Evolving Fund III 0.5 1.1
Acsys Investments Private Limited 0.9 1.9
Insurance companies 1.2 2.5
Others 6.8 13.9
Total 48.8
Notes:
(1) Great Terrain is an affiliate of Warburg Pincus.

Exhibit 55: Brief profile of board of directors

March fiscal year-end, 1HFY21
Name Designation Educational background Age Brief profile
He joined the company as chief operating officer –

asset management services in March, 2016 and was
Bachelor's degree in engineering
appointed as whole-time Director and CEO with
(mechanical) from Birla Institute of
Whole-time Director and effect from November 6, 2018. He was previously
Anuj Kumar Technology and post-graduate diploma in 53
CEO associated with Godrej & Boyce Mfg. Co. Ltd., Blow
management from the Indian Institute of
Plast Limited, Escorts Finance Limited, BillJunction
Management Calcutta
Payments Limited, IBM India Private Limited and
Concentrix Daksh Services India Private Limited.
He is on the board since December 17, 2019. He

has previously served as Chairman and Managing
Chairman and Independent Bachelor’s degree in science (honours) from
Dinesh Kumar Mehrotra 67 Director of Life Insurance Corporation of India where
Director the University of Patna
he also served as the Executive Director of
international operations.
Post-graduate diploma in management from He is associated with Warburg Pincus India Private
Indian Institute of Management Bangalore Limited since 2007 where and currently holds the
Narendra Ostawal Non-executive Director and attended the international executive 42 position of Managing Director. He has previously
business program at the University of been associated with 3i India Private Limited and
Chicago’s Graduate School of Business McKinsey & Company, Inc.
Bachelor's degree with honours in commerce

from University of Bombay and master's He was previously associated with ATC Tires Pvt.
Zubin Soli Dubash Non-executive Director degree in business administration from the 61 Ltd., Tata Sons Private Limited, WNS Global Services
Wharton School of the University of Pvt. Ltd. and DSP Merrill Lynch Limited.
Pennsylvania
Bachelor's degree with honours in commerce

He was associated with HDFC and is currently a
Vedanthachari Srinivasa from University of Delhi and is an associate
Non-executive Director 60 whole-time director of HDFC and is responsible for
Rangan of the Institute of Chartered Accountants of
its treasury, resources and accounts functions.
India
He was a director on the board of directors of

Member of the Institute of Chartered
Cholamandalam Financial Holdings Limited and
Natarajan Srinivasan Independent Director Accountants of India and the Institute of 62
Cholamandalam Investment and Finance Company
Company Secretaries of India
Limited, previously.
She has previously served as an Executive Director of

Master’s degree in commerce from Central Bank of India and the Chairperson and
Vijayalakshmi Rajaram Iyer Independent Director 65
University of Bombay Managing Director of Bank of India. She was also
associated with IRDAI as a member (F&I).

Exhibit 56: Brief profile of top management

March fiscal year-ends, 1HFY21
Remuneration (Rs mn)
Name Designation Educational background FY2020 Brief profile
He joined the company as chief operating officer –
asset management services in March, 2016 and was
Bachelor's degree in engineering
appointed as whole-time Director and CEO with
Whole-time (mechanical) from Birla Institute of
effect from November 6, 2018. He was previously
Anuj Kumar Director and Technology and post-graduate diploma in 32.0
associated with Godrej & Boyce Mfg. Co. Ltd., Blow
CEO management from the Indian Institute of
Plast Limited, Escorts Finance Limited, BillJunction
Management Calcutta
Payments Limited, IBM India Private Limited and
Concentrix Daksh Services India Private Limited.
Bachelors degree in commerce from the He joined the company on July 6, 2009 as a General
University of Madras and passed the final Manager and was promoted to Chief Financial
Chief Financial examination held by the Institute of Cost Officer with effect from April 1, 2018. He was
Somasundaram M. 13.0
Officer and Works Accountants of India and the previously associated with SRF Limited, Henkel SPIC
final examination held by the Institute of India Ltd., Pond’s India Limited, Hindustan Lever
Company Secretaries of India Limited and TVS Electronics Limited.
Bachelors degree in commerce from the

Chief Financial University of Madras, Faculty of He joined the company on March 2, 2020. He was
S.R. Ram Charan Officer- Commerce and an associate meber of 1.0 previously associated with Photon Interactive Private
designate the Institute of Chartered Accountants of Limited and Reliance Jio Infocomm Ltd.
India
He joined the company on December 18, 2014 as a

Bachelor's degree in technology
Senior Vice President and was promoted to Chief
(chemical engineering) from Indian
Chief Operations Officer on April 6, 2018. He was
Institute of Technology Delhi and post
Srikanth Tanikella Operations 15.7 previously associated with Accenture India Private
graduate diploma in management from
Officer Limited, Infosys BPO Limited, Infosys Technologies
the Indian Institute of Management
Limited, Global e: Business Operations Pvt. Ltd. and
Calcutta
Williams Lea India Private Limited.
Bachelor's degree in technology

(electronics and communication He joined the company as Chief Platform Officer on
Chief Platform engineering) from Jawaharlal Nehru December 10, 2019. He was previously associated
Ravi Kethana 2.9
Officer Technological University and master's with Tata Consultancy Services Limited and Wipro
degree in technology (electronics) from Limited.
Banaras Hindu University
He joined the company on April 3, 2017 as
Head–New Businesses. He is also a director on the
Bachelors degree in science from
board of directors of CFISPL and CIRSL. He was
Bangalore University, post graduate
previously associated with Bangalore Business to
diploma in business administration
Head–New Business (Eastern Circle Yellow Pages Pvt. Ltd.),
N. Ravi Kiran (general) from St. Joseph’s College of 14.5
Businesses Dharma Software Solutions Pvt. Ltd., VeriFone India
Business Administration Bangalore and
Limited, Reliance Systems Private Limited, Venture
diploma in management from Indira
Infotek Global Private Limited, Wipro Technologies (a
Gandhi National Open University
division of Wipro Ltd.), Amansa Capital Pte Ltd and
Value Labs LLP.
Bachelors degree in science (chemistry) He joined the company on October 14, 2017. He has
Vasanth Jeyapaul Senior Vice and a masters degree in business previously worked with with Bennett, Coleman & Co.
13.2
Emmanuel President administration from Madurai Kamaraj Ltd., Agenda Netmarketing Ltd. and Financial
University Software & Systems (P) Ltd.
He joined the company on December 2, 2014 as

Senior Vice President and was appointed as the Chief
Executive officer–insurance of CIRSL on August 14,
Post-graduate diploma in management
Chief Executive 2019. He was previously associated with the Indian
from Indian Institute of Management
Abhishek Mishra Officer–insuran 8.8 Railway Service of Mechanical Engineers, A.F.
Society, Lucknow and an associate of the
ce of CIRSL Ferguson & Co. (Management Consultancy Division),
Institution of Engineers (India)
HCL Perot Systems, GE Capital International Services,
Washington Mutual Bank, Accenture Services Private
Limited and ISG NovaSoft Technologies Limited.
He joined the company as Company Secretary on

Company Bachelor's degree in commerce from
June 8, 2011 and was designated as the Compliance
Manikandan Secretary and Bharathidasan University and master's
6.2 Officer on December 17, 2019. He was previously
Gopalakrishnan Compliance degree in commerce from Madurai
associated with BPL Limited, Precot Meridian Limited,
Officer Kamaraj University
SJK Steel Plant Limited and SBQ Steels Limited.

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Company Report

Computer Age Management Services (CAMS) ADD

Initiate with ADD rating: Leading MF play

Risks: Excessive yield compression, concentration, adverse regulation, operating risks

Company data Stock data High Low Price performance 1M 3M 12M

BUSINESS OVERVIEW: COMPUTER AGE MANAGEMENT SERVICES

Source: Company, Kotak Institutional Equities estimates

Exhibit 2: CAMS – financial highlights

2017 2018 2019 2020 2021E 2022E 2023E 2024E

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

INITIATE WITH ADD: KEY PICK AMONG MF PLAYS

Initiate with ADD

Moderate medium-term growth for the MF industry

Duopoly structure helps while yields head south

A significant proportion of CAMS’ revenue is linked to MF AUMs managed by the company.

Improving productivity to cushion yield compression

4 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Our DCF implies 33.7X PER March 2023E

Exhibit 3: We value CAMS at Rs1,850/share March 2023E

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 5

Revenues yoy (LHS) MF AAUM yoy (LHS) Calculated yields (RHS)

Source: Company, Kotak Institutional Equities estimates

CAMS relatively more shielded from market share movements; commands a

6 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Source: Company, Bloomberg, Kotak Institutional Equities estimates

SS&C trades at a rich valuation due to a diverse offering

KOTAK INSTITUTIONAL EQUITIES RESEARCH 7

Source: Company, Kotak Institutional Equities

SS&C Technologies State Street Corporation Blackrock T. Row Price

Source: Bloomberg, Kotak Institutional Equities

8 KOTAK INSTITUTIONAL EQUITIES RESEARCH

MF RTA: DUOPOLY DOMINANCE BUT PRICING POWER SKEWED TOWARDS AMCS

Mutual fund RTAs provide a wide gamut of services to clients

KOTAK INSTITUTIONAL EQUITIES RESEARCH 9

 Risk management and business enablers. Maintaining security standards is absolutely

 Value-added services provided to multiple stakeholders in mutual fund industry.

Knowledge Valued added

RTA is a niche segment, integral to the MF ecosystem

 Strong revenue growth during FY2016-20 though lagging MF AAUM growth.

10 KOTAK INSTITUTIONAL EQUITIES RESEARCH

 RTAs delivered similar growth as AMCs; might be difficult to sustain. During

 On the back of moderate inflows, underperformance of active funds, higher focus on

 MF AAUM growth to moderate. We expect overall MF AAUM growth to moderate

KOTAK INSTITUTIONAL EQUITIES RESEARCH 11

Source: Company, CRISIL, Kotak Institutional Equities estimates

Source: AMFI, Kotak Institutional Equities

Exhibit 11: Yields have dropped for MF RTAs

2015 2017 2019 2020

12 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Source: Company, Kotak Institutional Equities estimates

 RTAs remain relatively more shielded to performance-related risks. Unlike AMCs,

MF AUM to GDP (LHS) Equity AUM to GDP (RHS)

KOTAK INSTITUTIONAL EQUITIES RESEARCH 13

Revenue contribution from AIFs to increase over time

Exhibit 14: Strong growth in AIFs; albeit moderation in pace of growth

AIF (LHS) YoY (RHS)

Source: CRISIL, SEBI, Kotak Institutional Equities