CAMS - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 4.1

📊 Core Financials:

- Quarterly PAT at 111 Cr. vs 105 Cr. shows steady growth, though YoY profit variation is slightly negative (-3.71%).

- EPS of 17.8 ₹ reflects healthy profitability.

- ROCE (54.8%) and ROE (43.9%) are excellent, indicating strong efficiency and shareholder returns.

- Debt-to-equity ratio of 0.06 highlights negligible leverage.

- Cash flows remain robust, supported by strong margins and consistent operations.

💹 Valuation Indicators:

- Current P/E of 42.6 is below industry average (53.3), suggesting fair valuation.

- P/B ratio ~ 16.6 (758 ₹ / 45.6 ₹), indicating stretched valuation relative to book value.

- PEG ratio of 2.92 highlights growth lagging valuation.

- Intrinsic value appears slightly lower than current price, limiting margin of safety.

🏢 Business Model & Competitive Advantage:

Computer Age Management Services (CAMS) operates as India’s leading registrar and transfer agent (RTA) for mutual funds. Its competitive advantage lies in market leadership, regulatory backing, and high entry barriers. The business model is asset-light, scalable, and benefits from rising retail participation in capital markets.

🎯 Entry Zone & Long-Term Guidance:

- Entry zone: 700–740 ₹ (near support levels and undervaluation zone).

- Long-term holding: Attractive for investors seeking exposure to India’s growing mutual fund industry. Accumulate on dips for steady compounding, but monitor valuations.

Positive

• Strong ROCE (54.8%) and ROE (43.9%)
• Debt-to-equity ratio of 0.06 shows negligible leverage
• EPS of 17.8 ₹ reflects solid profitability
• DII holdings increased (+3.45%)
• Market leadership in mutual fund services

Limitation

• P/B ratio (~16.6) indicates stretched valuation
• PEG ratio of 2.92 shows growth lagging valuation
• Quarterly profit variation (-3.71%)
• FII holdings decreased (-5.10%)
• Weak technical momentum (MACD negative)

Company Negative News

• FII holdings reduced (-5.10%)
• Quarterly profit variation negative despite steady PAT

Company Positive News

• DII holdings increased (+3.45%)
• Strong 52-week performance (+33.6%)
• Debt-free status ensures financial stability

Industry

• Industry P/E at 53.3 indicates sector is richly valued
• Growth driven by rising retail participation in mutual funds and capital markets
• High entry barriers due to regulatory requirements

Conclusion

⚖️ CAMS demonstrates strong fundamentals with excellent ROE/ROCE, debt-free balance sheet, and market leadership. While valuations are stretched on book value and PEG metrics, the company remains attractive for long-term investors in India’s mutual fund growth story. Best accumulated near 700–740 ₹ for optimal entry.