CAMS pitch deck-Investment Analysis & sTANCE

CAMS pitch deck

1. COMPUTER AGE MANAGEMENT SERVICES ltd.
AIC ROUND-II
DECISION TO HOLD
technology driven financial infrastructure and
services providerto Mutual Funds and other
financial institutions(25+ yrs); Indian Mutual Funds
(69%of the average assets under management)
competitive technology
advantage according to CAMS :
capability, functionality,
integration and scalability
AI & ML
integrated for
business efficiency
−20.80(0.83%)
Valuation as of
23/9/23 20:01
B2Bservice
partner
collective
ownership
byHDFC Group,
NSE and Acsys
Investments

2. DECISION TO HOLD:
Despite/Due to personal goals:
•long term trading (Warren Buffet strategy)
•willing to be patient for desired ROI but
the wait here does not pay off (contd.
reasons)
•Optimal profit margins
•Sustainable AI B2B service
•Low risk taking willingness
•Diversified portfolio in more expensive
stocks or concentrated portfolio in less
expensive stocks
Decision to hold rather than sell (wait out overvaluation phase
until sustainable growth of stocks and increase in real future
value (time value of money) and an even higher ROI)
DCFModel
base case
scenario<
Share
holders
pullback by
some
players
Medium to
High risk
investment
to hold
65%
overpriced
at the
moment
Better
interest rates
lost as
opportunity
cost
Inflated prices
might
encourage
selling for
short term
traders
Investors
are limited,
concentrat
ed
ROI low
for market
conditions
+
•Quantitative
•Qualitative analysis (foll.)

3. WORSTCASE BASE CASE BEST CASE
g 12.88% 11.71% 10.54%
n 5 5 5
r -7.14% 0% 7.14%
Worst case scenario gives negative returns due to terminal growth rate being negative. After 5 years, which is a high
risk period for a short term trading vision, best case scenario is 7%. We assume 7% growth rate for Real GDP as a
whole annually, mirroring individual effect on firms, the rate is incremental by 0.14% on compounded growth even
after 5 years,. Base rate projects r to be0% which is not particularly encouraging for new investors, meaning the
burden of investment will remain to be concentrated and high risk for current investors. However, the neutral 0%
rate also leaves space to make a decision to either buy or hold.
Negatives in valuation : PART A
{Using DCF Operating Model (g=discount rate, r=terminal growth rate, n=nper(annually), we project Computer Age Management
Services Ltd'sfuture free cash flow and discount it at a selected discount rate to calculate its Present Value (37.3B INR)}

4. Negatives in valuation : PART B
Against the market value of 2,480 INR, the
inflation overvaluation marks its real time
value at less then half the present value.
Dividend yield is 1.94%
As such, short term investors/beginners to
market might be mistaken to sell shares at
an inflated rate and earn profit. However,
my decision is to HOLD because of
multiple reasons (following:)
Last two columns
signify the quarter to
quarter revenue and
net profit for these
mutual funds, which
have all gone down,
causing loss of trust
and pulling by
shareholders. (JUNE,
2023)
When Moving Average Convergence/
Divergence indicatorfalls below signal
line, it is a bearish signal indicating
thatit may be time to sell. (March 2023)
Many stock holders suffered high loss
with high volume(decrease in real value
of their concentrated stock).

5. -NOPAT: one of the most important metrics for
valuation; measuring sustainability of business
(Net after Tax): TREND: holding momentum so
far, meaning that dividend for investors is likely
to grow steadily over 5 years. Best case-Base
case: 5260-4660= (-)700
BUSINESS GROWTH TRENDS:
Self sustaining cycles: Mutual Funds industry
growth directly correlates to CAMS’. Q1 ‘23_
profit growth=18% to 76 cr. Projected growth
for MF industry ensures even more asset
consolidation under management for CAMS.
Revenue growth (10.4 in Q2, 2022)nm
Recorded margins: CAMS has maintained
both growing compounded revenue AND
profit in the last quarters, which shows
long term sustainability as the margins
grow for EBIT. Strong momentum.
Most stockholders haven’t placed/bought
their stocks with banks as loan liabilities (0
promoter pledge) which eliminated
promoter pledge on liabilities side of the
accounts for CAMS.
Except for some players like Bharat
Electronics Ltd whose QoQprofit is
negative currently, most of the
stockholders project positive QoQwith 0
debt and liability, which is very important
for net valuation of CAMS. There are little
to no liabilities, meaning, that even
though dividend margins are low
currently, the company is in the phase
where the profit margins are about to
overcome the initial losses and debts.
Positives in valuation : PART A (Quantitative)
While dividend is small, it is still growing
at a steady rate, which is very promising
for those who wish to hold.
MACD (last slide) recently went up
significantly (in current FQ), increasing
overall value. (+veindicator for
buying/holding)

6. •Buy
•Hold
•Stock seems to have ‘BOTTOMED OUT’ (HIGH RISK THOUGH). Few sellers are
available for CAMS stocks. However, buyers are plenty. FIPs and AIFs are
increasing shares. Meaning, that even though stock prices are low currently, this
might be the start of an upward trend.
Share price forecast: low to
medium
•Warburg Pincusis a leading PE firm who owns 19% stock.
•Analysts predict the share price to go up as well as to buy or hold stock.Established market opinion
Most recent metrics in
FY’23
(Table data from CAMS
website)
Positives in valuation : PART B (Quantitative)

7. World class dynamic IT platform, apps, professionals with expertise in Mutual Funds RTA (handling top
10 of 15 MF in Indian market), 5600+ mninvestment in tech infrastructure already.
On the job training for 7300+ employees, experienced, diverse. IT trained hires. Wellness and
engagement initiatives (social objective for investment)
Present across 25 states, Main centres in all metropolitans: Chennai, Hyderabad, Mumbai, 628 mn
capexfor infrastructure.Membership in local enterprise partnership and industry bodies. (follows
regulatory practices)
CorporateSocial Responsibility (csr) spending 50mn+, 93% feedback positive, 51mn(portfolio
held)+ 22.9mn(servicing) investors. Compliance to regulatory requirements. Brand credibility,
Safety of investor data, Responsible practices are priority values done through corporate reporting.
No borrowings at all; 6,476 mnin equity. Financial prudence and robust balance sheet position top
prioritiy. Adequate returns, capital appreciation, Transparency maintained in regular statements to
investors. Regular risk management at every FQ end.
GENERAL ADVANTAGES FOR VALUATION: CURRENT RESOURCES AND CAPITAL (Qualitative )
POSITIVES IN VALUATION: PART C

8. Overall decision to hold:
1. Negative vs positive evaluation sought to clear only 2 options at this point in time: >BUY< OR >HOLD<
Selling is not an option clearly because not only the share prices have been in a downward fall trend but also
because you’d be making a loss on initial investment. Investors might want to avoid further depreciation in
value as well. While a valid concern, the other factors considered guarantee an upward growth in coming
FY’s, Also, the ratio is higher towards buyer side as compared to sellers in the market currently, meaning a
higher price can be received later on.
The reason I don’t recommend buying for short term low risk traders after guiding decision by all data is
because despite the potential for growth, as explained by many investors (e.g. Damodaran), this may either
be the cliff where investor must pull out or take off. For a short term trader with lesser capital and risk taking,
the profit margins while increasing steadily, the risk lies in medium to high. The dividend is growing very
slowly for a short term trader. The MACD while +venow, still has a lot to overcome after the recent shock this
year only.
Company has minimal financial liabilities. NOPAT and Individual returns for stockholder companies seems to be
steady and showing a sustainable trend. Therefore holding would mean that investor first confirms that the share
price has completed the downward trajectory and right where it begins to take off, you can buy in at a least possible
prices as the trajectory will now move upward now that profit margins are gradually increasing and company is
moving from revenue focused growth to actual net benefit growth. This confirmation is important for a safe bet.
Company standing (qualitative slide) is also at a stronghold. Holding for current investors is also recommended as in
the long term, the forecast and calculations for future time value guarantee net benefits from shares now.