Image source: Business vector created by macrovector - www.freepik.com
The initial public offer (IPO) of CAMS, a technology-driven financial infrastructure and service provider, opens for public subscription today i.e. September 21 (till Sept 23).
(If you wish to know 'How to apply for an IPO, Read here)
Here are 10 key things that you should know before you subscribe.
Incorporated in 1988, Computer Age Management Services (CAMS) Ltd is a technology-driven financial infrastructure and service provider. CAMS currently provides technology-based services including dividend processing, transaction origination interface, payment, transaction execution, dividend processing, intermediary empanelment, report generation, investor interface, settlement and reconciliation, compliance-related services, and brokerage computation.
2) Business segmentation:
The company has capital sponsorship from investors such as Great Terrain, an affiliate of Warburg Pincus, which is also the promoter, HDFC Ltd. and HDFC Bank Ltd. Almost 90% of CAMS’ total revenue comes from mutual funds. Karvy Ltd. is India’s second-largest mutual fund registrar and transfer agent.
CAMS has a wide network comprising 25 states, 278 service centers, and five union territories. It also offers services online through a mobile application.
3) Issue details & Valuations:
IPO Date: Sep 21, 2020 - Sep 23, 2020
Issue Size: 18,246,600 Eq Shares of ₹10
Face Value: ₹10 per equity share
IPO Price: ₹1229 to ₹1230 per equity share
Employee Discount: ₹122
Market Lot: 12 Shares
Listing At: BSE
Bid/Offer Opens On: Sep 21, 2020
Bid/Offer Closes On: Sep 23, 2020
Finalisation of Basis of Allotment: Sep 28, 2020
Initiation of Refunds: Sep 29, 2020
Credit of Shares to Demat Acct: Sep 30, 2020
IPO Shares Listing Date: Oct 1, 2020
Great Terrain Investment Ltd is the promoter of the company.
4) Grey market premium
CAMS IPO so far, is seeing its shares trade at 28% premium.
CAMS compounded annual sales growth stood at 12.8% for FY15-20 against Karvy’s 9.1% It manages Rs 6,326 crore in AUM per branch compared with Karvy's Rs 3,237 crore. Ebitda margins for the company were better at 42.8% compared with Karvy’s 36%.
Company’s policy is to pay 65% of the consolidated profit after tax (PAT) as dividend, which it plans to continue after the IPO.
6) No listed peer
CAMS’ direct peer is Karvy but it has no competition in the listed space.
7) Debt Free
The company has zero debt.
The objects of the Offer are:
1. To carry out the Offer for Sale of up to 18,246,600 Equity Shares by the Selling Shareholders; and
2. Achieve the benefits of listing the Equity Shares on the BSE.
- Largest infrastructure and services provider of mutual fund.
- A diverse portfolio of technology-enabled services.
- Pan-India physical network.
- Scalable technology enabled ecosystem.
- No listed peer.
- 70% of revenue comes from top five clients.
- The company is subject to periodic audit inspection by SEBI. Non-compliance with SEBI observations could expose the companies to penalties and restrictions.
- Future revenue and profit dependant on growth, value and composition of AAUM of mutual funds managed by the company’s clients, which may decline.
- Regulatory challenges such as limit of total expense ratio stunts the growth of mutual fund registrar and transfer agents.
Suggestion: Apply for only 'one lot' and Subscribe this issue for small listing gains as well as for long term investment.
Open demat account in a day here (Upstox)
Research Analyst (SEBI Regd.)
Linkedin | firstname.lastname@example.org