Computer Age Management Services Ltd Q3 FY2026 Concall Summary

Key Takeaways

• Margin surprise, driven by MF efficiency: EBITDA margin jumped ~100 bps QoQ to 45.8%, with the mutual fund business contributing the bulk of the improvement, not non-MF.
• Headcount flat despite scaling: CAMS added 6 AMCs and SIFs in the last year while keeping headcount absolutely flat in calendar 2025, a vindication of its automation-led operating leverage.
• Non-MF ambition is back-loaded: The non-MF portfolio improved from sub-10% EBITDA a few years ago to over 13% now, but the aspirational 25-30% target is a multi-year journey, not a near-term event.
• New platform is the next efficiency unlock: A modern, API-first platform is being built to replace batch processing; management sees "humongous benefits" but refuses to quantify the margin impact publicly.
• What to watch next quarter: The pace of new AMC go-lives (4 carried forward plus potential new wins), the Q4 seasonal uptick in CAMSPay, and any clarity on the TER regime's final shape.

Margin Walk & Operating Leverage

• MF business did the heavy lifting: The QoQ margin improvement was predominantly from the mutual fund business; non-MF margin gains were present but not significant enough to drive a 100 bps move.
• Headcount efficiency is structural, not cyclical: Over 2016-2025, CAMS engineered a 5x expansion in assets and transactions with almost constant headcount. The last four years, which included onboarding 6 clients and SIFs, saw net headcount flat to lower.
• New AMC cost structure is lean: Incremental cost for a new AMC is mainly 10-15 people; platform efficiency keeps customization costs limited. Once the AMC ramps revenue, it turns margin-accretive.
• The puts and takes framework: Margin pressure comes from annual remuneration increases (7-10%+ in a good year), moderate yield pressure, technology investments, and regulatory costs. These are offset by productivity enhancements and technology. Post-listing, margins have crept up by at least 100 bps a year.
• Labour law impact is largely absorbed: The full gratuity impact from the new labour code was taken via actual valuation in the current quarter; no significant additional cost is expected going forward.

Kumar: "If you clinically see headcount, headcount has remained flat in calendar '25, which means the headcount we entered with and the headcount we're exiting with is exactly the same. This is despite significantly expanded count of everything."

Non-MF Business: The Long Build

• Current state is a mixed bag: The non-MF bucket contains both profit-making and loss-making businesses. Margins have improved from sub-10% EBITDA a few years back to upwards of 13% currently.
• The 700 bps ambition is real but paced: A 700 bps improvement in non-MF margins over a 3-year period from current levels is "absolutely possible," per management. On a YoY basis, the increase so far is closer to 100 bps, not 300 bps.
• Platform businesses are the margin engine: As more revenue layers onto platform-based businesses (AIF, WealthServ, account aggregator, pension), management expects margin improvement to replicate every year. The long-term aspiration is 25-30% EBITDA in a couple of years, with 40-50% coming only after 5-7 years.
• CAMSPay is scaling toward a milestone: Expected to grow from ₹70 crores to ₹100 crores next year. Once it reaches ₹90-100 crores, management will pause and assess; it is unlikely to acquire payment assets unless they align with the 30%+ EBITDA margin aspiration.
• Revenue mix target is deliberate, not rushed: CAMS aims for non-MF to contribute about 20% of revenue. The company targets ₹1,500-2,000 crores in total revenue over the next 3 years, implying a ₹400 crore non-MF book at that point.

Kumar: "We don't want to be an overdiversified company. It's not our attempt. I think investors pay value for the kind of business they like, and we don't want to make it a mishmash."

Technology & Platform Transformation

• A new platform is being built from the ground up: The current platform still carries inefficiencies, including labour components in reconciling 300 crore emails annually. The new platform, built on modern technology, will enable instant, non-batch processing via APIs.
• Cloud migration is underway: The data lake/warehouse is moving from on-prem Oracle to Google Cloud Alloy and BigQuery, expected to complete by April-May. AI-based data extraction for form processing is being embedded into the platform and will go live in Jan-March.
• CAMS Lens is the first visible AI product: A compliance product built as a small language model on top of an existing LLM, currently used internally and set to be opened to the marketplace.
• Management refuses to quantify the platform's margin impact: While acknowledging "humongous benefits," management will not publish a margin correlation number, partly citing workforce sensitivity around any contractions.

Kumar: "It's very easy for me to put a number and start publishing it to you guys and circulate it. We are not doing it now on a purpose. One, of course, is the workforce angle because we do not want to publicly cover any contractions in workforce, we will not do that."

Competitive Position & New Business Wins

• 6 AMCs taken live in the last year: Four new domestic logos, one domestic transition, and one Sri Lankan logo. Four more are carried forward to go live in 2026, with possibly 2-3 additional wins by June also eligible.
• Carnelian mutual fund mandate won: The most recent disclosed win, adding to the pipeline.
• CAMS sells value, not price: Management distinguishes between two types of new entrants: broking companies entering the MF space (who understand the value of a quality RTA) and PMS/AIF players converting to MF (who may be more price-sensitive). CAMS does not chase deals at the bottom.
• Market share strategy is profitability-weighted: The stated goal is to sustain and expand market share and AUM in the most profitable and remunerative parts of the overall stack.

Kumar: "You will not find us chasing those deals. I think the operating part of the argument is that we want to sustain and expand market share and AUM and want to sustain and expand market share in the most profitable and the most remunerative parts of the overall stack."

Regulatory & Pricing Environment

• TER impact is uncertain but not feared: Management will wait for the final regime to settle, possibly by Q1 next year, and for any industry conversations to play out. The belief is that the impact will not be very large.
• The ₹20-25 crore TER impact figure is analyst math, not management's: Management declined to confirm or deny the number, stating it was calculated by analysts and they are not publicly endorsing or denying it.
• KRA pricing is being watched: Management is monitoring whether industry pricing conversations will lead to changes; for smaller SIPs, very friendly rates already exist.
• Fixed pricing is a distant possibility: Management believes a fixed-price-per-transaction model could actually make more money than the current AUM-based model, but the industry is not ready for such a humongous change in the next 3-4 years.

Kumar: "I'll give you the honest answer that if I had a fixed cost or price portfolio, a fixed price per transaction, a fixed price for any activity, I would perhaps end up making more money than I make today."

Guidance & Commitments

Key Metrics