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Anuj Kumar of CAMS predicts 17-18% revenue growth in FY25; shares rise over 5% after strong Q4 results
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
The company predicts the mutual fund business to grow by 15% and the non-mutual fund segment is expected to grow by over 20% in FY25.
Leading transfer agent for mutual funds, the Computer Age Management Services Ltd shares gained more than 5% on Friday after the company projected up to 18% revenue guidance for FY25 following strong Q4 results.
Anuj Kumar, the Managing Director of CAMS, articulated the company’s ambitious growth targets for the fiscal year 2024-2025 (FY25) in a conversation with CNBC-TV18. Outlining the key growth strategies and performance projections Kumar predicted a 17-18% growth in revenue in the current fiscal.
Kumar said that the company made significant investments in building platforms for non-mutual fund businesses. He added that now CAMS was in the go-to-market stage, signing up new customers and scaling volumes, which is expected to be margin accretive as the buildout costs of platforms have slowed down.
“So, overall, this will be margin accretive as the buildout cost of platforms has kind of slowed down. That buildout happened in FY 22, 23 and 24, and now we will enjoy the benefits of scaling revenue in the same,” Kumar said.
He highlighted the sustained performance of the company in the fourth quarter citing a remarkable 52% growth in revenue for the non-mutual funds sector. “If I keep out the acquisition of Think 360 on a constant basis, they grew 38%,” he said.
Looking ahead to FY25, Kumar expressed confidence in achieving a high teens growth rate in revenue, with a similar profile anticipated in profits. He said that the non-mutual fund business is poised to enhance margins.
According to Kumar, the mutual fund business is expected to grow by 15% and the non-mutual fund segment is expected to grow by over 20% in FY25.
Moreover, Kumar also highlighted CAMS’ strategic focus on exploring inorganic opportunities, particularly in the insurance or alternative space. He said currently, there is no explicit directive for the demat of insurance policies. But there exists clear guidance on the issuance of digital policies, which can include placing them in the Digilocker or simply sending them as PDFs via email.
In terms of financial performance, Kumar articulated the company’s commitment to continual improvement, aiming for a notable 100 basis points enhancement in EBITDA margin on an annual basis going forward.
In its quarterly earnings report released on Thursday, the leading registrar and transfer agent for mutual funds reported a 38.5% growth in net profit at ₹103 crore in the March quarter against ₹74.36 crore in the year-ago period. The surge in profit was driven by strong performance across segments.
The company’s revenue grew 24.6% year-on-year to ₹310.46 crore in Q4FY24 against ₹249.24 crore a year ago.
Shares of CAMS settled 4% higher at ₹3,220 apiece, on the NSE.
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