Computer Age Management Services Ltd Q2 FY2026 Concall Summary

Key Takeaways

• Record revenue, price reset fully absorbed: Highest ever quarterly revenue was achieved despite a large price give earlier in the year, with 60% of incremental revenue flowing to the bottom line and EBITDA margin back above 44%.
• Non-MF segment hits its stride: Non-MF revenue grew 17.9% QoQ and now contributes 14.4% of total revenue, with the scaled businesses (alternatives, KRA, payments) already producing 20% to 35% operating EBITDA.
• The onboarding engine is running at 6X historical pace: Six AMCs went live in 2025, including Jio BlackRock and a migration from Taurus, with three more expected in the next 4-5 months.
• Pricing parity achieved, stability ahead: The root cause of the one-in-30-year price correction has been addressed, with no major renewals or renegotiations expected for at least 18 months.
• What to watch next quarter: Whether MF revenue scales back to its peak as guided, the pace of KRA revenue recovery toward its own high-water mark, and any fallout from the SEBI consultation paper on TER cuts that management declined to assess on the call.

The Price Reset: Absorbed and Behind Us

• One large event, now fully digested: The price reduction for a top-three AMC, described as a once-in-30-years event, played out as guided with a 0.03 to 0.04 yield compression QoQ on a static equity mix. The entire impact has been taken, and no further yield impact beyond normal telescopic pricing is expected.
• Root cause addressed: The trigger was similarly sized customers with a large variance in price. Management states that parity has now been reached among the top three, with no big difference remaining that would invite renegotiation.
• Revenue recovery underway: Within two quarters of implementing the price cut, CAMS posted its highest ever enterprise revenue. Management hopes to reach the highest ever MF revenue by the end of the current quarter.
• No floor, but no panic either: Management pushed back on the idea of imposing a pricing floor, arguing the MF business model is not a cost-plus services model amenable to constant renegotiation. The nomination methodology itself is changing in a way that discourages frequent price discovery.
• The 18-month calm: No major customers are up for renewal for the rest of the year. A couple of midsize customers come up next year, and a couple of larger ones the year after.

Anuj Kumar: "Will it happen again? It happened once in 30-years. Will it happen again... I think any large price correction of the kind that you have seen one in maybe three decades is not a very likely event."

Non-MF: The Second Engine Fires

• Scale is converting to profit: The scaled non-MF businesses (alternatives, KRA, payments) are already producing 20% to 35% operating EBITDA. Smaller businesses like insurance are at ₹25-30 crores revenue with some labor component, while still-smaller units need to cross ₹14-15 crores to turn profitable.
• Alternatives hit a record: Highest ever quarterly revenue, with overall AUA inching close to ₹3 lakh crores and 40-plus mandates added during the quarter. The AIF business is strong enough to grow 15% a year.
• KRA rebound underway: Revenue grew 45% QoQ after a Q1 dip caused by the clampdown on F&O account openings. Not yet at its highest ever revenue, but expected to get there in the next two quarters. The NSE KRA business transfer is on track, with operations moving in December and net revenue accretion starting Q4.
• CAMS Pay momentum: Grew 26% QoQ, with significant ramp-up in payment gateway volumes.
• GIFT City goes outbound: The first outbound retail fund (DSP's global equity fund) went live, with multiple such schemes expected. CAMS already services over 30 clients in GIFT City.
• Non-MF margin target: Management expects the segment to reach 25% EBITDA margin within the next couple of years, with company-level operating EBITDA increment of about a percent a year as a reasonable expectation.

Anuj Kumar: "Our ability to grow our business at current scale, we are a Rs.1,450 1,500 crores company, for us to grow revenue at the rate of Rs.150 to 200 crores a year is perhaps the most acid test that I look for."

The Onboarding Boom: 6X the Workload

• Six AMCs live in 2025: Angel One, Unify, Jio BlackRock, Seabank Sri Lanka, Taurus (migration), and Choice all went live. Management calls this 6X the workload of five or six years ago. Three more are likely to go live in the next 4-5 months.
• Taurus marks the third successful migration in three years, following FT in 2021 and Navi in 2023.
• New AMCs are not discount acquisitions: Management explicitly stated that two AMCs won from competition (Navi and Taurus) are being charged more, not less. Evidence is available in scheme accounts. New logos' revenue contribution is only 1% over the last five years, so discounting the base makes no sense.
• The long payoff: New AMCs take three to four years or more to reach ₹10,000 crores AUM, and start contributing meaningfully to profitability only once they cross ₹15,000-20,000 crores.
• Sri Lanka inbound: An international opportunity from Sri Lanka was catered to using the same platform with minimum customization, hinting at the platform's extensibility without heavy cost.

Anuj Kumar: "We are okay to let some of the new logos go because just think about it. They might grow to Rs.1,000, 2,000, 3,000 crores, maybe Rs.10,000 crores. On a busy day, sometimes my AUM moves by Rs.50,000 crores. So, I must exercise judgment that in a haste to get new logos, we do not make mistakes and start discounting a base."

MF Industry Health: AUM, Flows, and the SIF Opportunity

• AUM milestones stack up: Crossed ₹50 lakh crores during the quarter, then ₹52 lakh crores by September, and ₹55 lakh crores on the best day in October.
• Equity net sales hit a record: Crossed about ₹1 lakh crore in the quarter, with net sales market share growing to 69% from 65%.
• SIP engine still accelerating: Collections grew 21% YoY, live SIP market share improved to 63.4% from 61.5% QoQ, and new SIP registrations stood at ₹1.14 crores.
• SIF product: slow start, big pipeline: The first scheme launched with SBI garnered ₹1,000 crores. Reaction was muted from September to December 2024, but 8-9 AMCs are now expected to launch between now and March.
• NFO share dominant: 33 schemes launched in the quarter, with CAMS capturing 80% of NFO collections, at the upper end of its typical 65% to 80% range.

CAMS AI and RE-ARC: The Quiet Build

• CAMS AI brand unveiled in August: The company spent a year and a half building the spine, capability, talent, tooling, and structure to build AI-rich solutions. No high-decibel PR accompanied the launch.
• RE-ARC platform re-architecture: The new platform is stated to go live in phases starting from the end of this financial year, though no specific date or milestone was committed.
• BIMA Central adding insurers: Tata AI was added as the fourth insurer on the platform, which also won two recognitions including GFF's most promising insurtech and one new end-to-end servicing contract. Cumulative user count crossed 12 lakhs.
• Algo360 and analytics wins: New contracts signed with Pay Nearby and SmartCoin, plus two new analytics clients acquired in the US.

Anuj Kumar: "We have not changed the company's name yet. We have not done any high decibel PR because that is not a habit where we do a lot of things and not do much."

Financial Model: The ₹200-Crore Growth Framework

• The math: Management aims to scale the business by ₹200 crores a year: ₹150 crores from MF (almost a given if assets grow by 8 to 10 lakh crores a year) and ₹50 crores from non-MF. Cost increases are held to ₹60-70 crores, so operating EBITDA grows by roughly ₹100 crores.
• Expense discipline holding: QoQ expense growth was less than 5% barring depreciation. A one-off provision for delayed collection of a couple of crores is expected to reverse next quarter. The company is on track to keep YoY cost increases to around 10% to 11%.
• 60% incremental flow-through: 60% of incremental revenue flowed to the bottom line this quarter, with EBITDA margin back above 44% (a 90 bps increase), PBT at almost 40%, and PAT at 29.6%.
• Non-MF margin trajectory: The scaled part of non-MF is already at 20% to 35% operating EBITDA. As revenue increases, the margin profile of platform-based businesses keeps improving, with investment phases largely over for platforms like BIMA Central, pension fund, and account aggregator.
• Inorganic optionality: Management continues to look at the market for inorganic opportunities, though nothing is immediate in the next two or three months.

Ram C Sesharaman: "We have seen almost 60% of the incremental revenue flow to the bottom line, which means that the profit margins are back to more than 44% on an EBITDA basis."

Guidance & Commitments

Key Metrics