Brokerage firm Motilal Oswal has maintained its positive outlook on Computer Age Management Services (CAMS) with a target price of Rs 940. The move follows the company's Q1 FY27 financial results, which showed steady growth in both revenue and profit. Investors are now watching the company's cost control and progress in newer, non-mutual fund business areas.
Motilal Oswal has reaffirmed its positive stance on Computer Age Management Services (CAMS), keeping a target price of Rs 940 for the stock. This decision comes after the company reported its financial results for the first quarter of the 2027 fiscal year. The brokerage report highlights that the company's performance was in line with expectations, driven by steady growth across its service segments.
In the first quarter, CAMS reported an operating revenue of approximately Rs 395 crore, marking an 11.5% increase compared to the same period last year. Profit after tax also saw a healthy rise, reaching Rs 128 crore, which is a 17.3% growth year-over-year. A key factor behind these numbers was the improvement in operational efficiency. The company’s EBITDA margins expanded by 270 basis points to 46.4%, helped by effective cost management strategies despite rising operational activity.
While the mutual fund business continues to be the primary revenue driver, CAMS is expanding into other areas like Account Aggregator and pension services to diversify its income. The company’s ability to use operating leverage—meaning its revenue is growing faster than its fixed expenses—has been a major contributor to the current profit margins.
However, the company does face certain risks that investors often track. One significant concern in the sector is yield compression, where the fees earned from mutual fund services may come under pressure due to competition or regulatory changes. Furthermore, while the core business is profitable, the company’s new ventures, such as the Account Aggregator and pension businesses, are currently EBITDA negative. This means these segments are spending more than they earn as they continue to invest in expansion and technology.
Looking ahead, the market will likely focus on how effectively CAMS can scale these newer non-mutual fund businesses to profitability. Higher spending on cloud infrastructure and AI to maintain service quality could also impact margins in the coming quarters. Investors may continue to track the company's quarterly updates to see if it can balance growth in new segments while maintaining the profitability of its core mutual fund registry business.