The company reported Profit After Tax (PAT) at Rs. 56.42 crores for the quarter ended December as against Rs. 46.23 crores in the same period last year.
He said equity had seen a very slow selling process because there were no in-person meetings owing to the pandemic. However, he said that the selling has now come back in the market and it was easily seen in the October-December time period.
CAMS at its peak would see about 10 lakh gross SIPs in a peak month, Kumar said. In April 2020 this number had fallen to 3.5 lakh. However, it rose to around 7.5 lakh in December last year.
“The overall trend is that of strong participation in debt, sustained participation in liquid and selling coming back into equity mutual funds while SIP inflows have been steady. With SIP numbers going up between October-December, we should be seeing growth now,” he said.
CAMS is India’s largest registrar and transfer agent of mutual funds with an aggregate market share of approximately 70% based on mutual fund average assets under management (AAUM) managed by its clients and serviced by them. Over the last five years, the company has grown its market share from approximately 61% during March 2015 to approximately 70% during December 2020, based on AAUM serviced.
“Architecturally we are closely tied to the fate of the mutual fund industry as almost 85-90% of the revenue comes from mutual funds,” Kumar said. “The mutual fund market had seen a significant dip in between April to June led by the pandemic but it started coming back from July onwards so the sales process, which had been impeded, resurrected itself.”
He said it was important to note that from a revenue and profit perspective, the mutual fund AUM has grown in the last 5 years by around 18%. He added that CAMS’ revenue grows at a small handicap to the AUM CAGR meaning that the company’s revenue has traditionally grown about 13-14%.
Revenues from operations stood at Rs 185.95 crores for the quarter ended December as compared to Rs 176.03 crores in the same period last year. Likewise, the total Income stood at Rs.192.34 crores in Q3 as opposed to Rs. 182.76 crores for the corresponding period last year.
However, he said the industry was poised to continue its growth as the penetration of mutual funds as a percentage of GDP is about 13-14% in India whereas in other major markets, this number goes up to beyond 50% and is mostly in the 60% range. This in turn would benefit CAMS owing to its intricate connection with the mutual fund space.
“Many mutual fund reports speak of around 96-98% of the pincodes are being serviced. That’s almost the entire country. When you service a large mass of investors, have enough geographical reach, focus on smaller towns, have investor education of a high degree and the ability to do transparent and effective fund management, the only way for the industry is to get more investors and get those who are already invested to increase their participation,” he said.
