Shares of Computer Age Management Services (CAMS) have seen a significant uptick, gaining more than 20% over the last month. This surge comes as Nuvama Institutional Equities reiterated its 'Buy' recommendation for the stock, elevating its 12-month target price.
Nuvama bullish on CAMS outlook
Nuvama Institutional Equities has increased its target price for CAMS to Rs 910, up from the previous Rs 850. The brokerage highlighted CAMS' strong performance in Q4 FY26, with revenue reaching Rs 395 crore, an 11.0% year-over-year increase, and Net Operating Profit Less Adjusted Taxes (NOPLAT) at Rs 150 crore, marking a 14.2% rise compared to the previous year.
According to Nuvama, CAMS' quarterly performance was influenced by several key factors. These included a slight constraint on AUM-linked growth due to weaker equity markets, stable yields with less than 1% compression, robust growth in the non-mutual fund segment, and stringent cost controls that led to EBITDA margin expansion for the third consecutive quarter. Adjusted Profit After Tax (APAT) also saw an 11.6% year-over-year increase, reaching Rs 126 crore, supported by stable other income.
Strengthening Franchise and Future Outlook
CAMS management anticipates an annual yield dilution of 3-3.5%. Despite this, the company has demonstrated improved core operating metrics, including an equity market share of 67.1%, a total AUM market share of 67.6%, and a net sales market share of 76.3%. New Systematic Investment Plan (SIP) registrations stood at 1.26 crore, indicating a strengthening underlying franchise.
However, a key area to monitor, as noted by Nuvama, is the potential for renegotiation of Registrar and Transfer Agent (RTA) yields by Asset Management Companies (AMCs). This could occur if AMCs seek to pass through Total Expense Ratio (TER)-related pressures to vendors, although no such negotiations have commenced yet.
Dividend Announcement
In related news, CAMS' board of directors has recommended a final dividend of Rs 4 per equity share. This recommendation is subject to shareholder approval at the Annual General Meeting (AGM) scheduled for July 7, 2026. The record date for this final dividend has been set for July 10, 2026.