Computer Age Management Services Ltd

NSE:CAMS

Earnings Call Analysis

CAMS Earnings: Strong Growth and Market Share Gains

In the first half of FY'24, Computer Age Management Services Limited (CAMS) reported their best-ever growth in assets, with a significant 20% year-on-year increase. Total assets stood over INR 32 lakh crore. The equity Asset Under Management (AUM) saw even higher growth at 28% year-on-year, while the company's market share in equity AUM expanded by 120 basis points to 65.5%. As net money from investors surged, CAMS' equity net sales market share was a robust 80% in the second quarter. Non-mutual fund (non-MF) revenue increased dramatically, with a year-on-year growth of 47% (30% excluding one-time contributions). Earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 15.5%, with a margin improvement of 70 basis points, and profit after tax rose by 17%.

Asset and Market Share Expansion

The company has witnessed substantial growth with its overall assets reaching over INR 32 lakh crores (32.2 trillion), marking a 20% increase year-on-year. The equity Assets Under Management (AUM) specifically surged by 28% to INR 15.2 lakh crores. This growth extended the company's equity market share by 120 basis points to 65.5%, up from 64% a year prior. Furthermore, there was a noteworthy expansion in non-mutual fund (non-MF) revenue, which increased by 47% year-on-year; even after excluding one-time contributions from Think360, this segment grew by 30%. The company is surpassing its target by achieving non-MF revenue growth in the 30% range, far beyond the projected mid-20s percentage.

Operational Highlights and Diverse Revenue Growth

Operationally, the company has been forging ahead, with notable developments such as a near doubling of revenue in the CAMS KRA space year-on-year and the onboarding of the top five insurers for a new platform. The reported earnings reflect a 13.5% increase in revenues and a 17% rise in profit after tax. Transaction volumes rose by 24%, signifying retail market expansion, and the SIP book grew by a similar margin year-on-year, indicating a strong adoption of Systematic Investment Plans.

Robust Financial Performance and Outlook

The financial performance also remained strong with a total revenue of INR 275 crores for the quarter, representing a 13.5% growth year-on-year. This was underpinned by a smart increase in AUM which grew over 20% on a yearly basis, coupled with Mutual Fund (MF) revenue growth of 10%. The non-MF revenue now accounts for 13% of the total revenue, showcasing diversification and strength outside traditional mutual fund services.

Strategic Initiatives To Drive Future Growth

Strategic initiatives continue to progress, particularly in the technology domain. The company is focusing on scaling up its innovative KYC solutions and expanding its reach across the insurance industry, having signed agreements with the leading insurers and boosting its e-insurance account (eIA) numbers by 40% year-on-year. Additionally, the CRA platform retains its #2 position in the eNPS segment, and the Think360 platform carries forward its growth trajectory with new intellectual property in wealth index analytics and generative AI.

Earnings Call Transcript 2024-Q2

[Operator]

Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY '24 Earnings Conference Call of Computer Age Management Services Limited hosted by Orion Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. [indiscernible] from Orion Capital. Thank you, and over to you, ma'am.

[Unknown Attendee]

Hi. Good afternoon, everyone. Welcome to the Q2 and H1 FY '24 Earnings Conference Call for Computer Age Management Services Limited. As mentioned today from the management we have with us Mr. Anuj Kumar, Managing Director; Mr. Ramcharan SR, CFO; and Mr. Anish Sawlani, Head of Investor Relations. Before we proceed start the call, I'd like to give a small disclaimer that this conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date. These statements are not guarantees of future performance and involve risks and uncertainties, which are difficult to predict.

A detailed disclaimer has also been published in the investor presentation, which was released to the stock exchanges. I hope everybody had a chance to go through the presentation. I will now hand over the call to Mr. Anuj Kumar, Managing Director. Thanks, everyone, and over to you, sir.

[Anuj Kumar, executive]

Thank you, [ Shiwali ], and good afternoon, everyone. I thank each one of you for taking time out to join our 2Q earnings call. Like we've done in the past, we will take you through a structured presentation. And then we will have about 35 to 40 minutes for Q&A once we are done with the presentation. This has already been uploaded. So I estimate most of you have already gone through it. But just to expand on the performance of the company during the second quarter. Outside of the big sustained story of growth in the second quarter, like we said we saw several historic highs. I will talk about them, expanding business share across both mutual funds and outside of mutual funds in terms of how we got share.

And then we achieved several key milestones across businesses. So you would have seen that we have reported -- we have been sharing with you 5 major [indiscernible] wins, 4 companies which are just starting off in the market. [indiscernible]. Of these 4, both [ Helios and Zerodha ] went live. This was, of course, outside 2Q, this happened in October. But it's worth sharing with each one of you that both of them have formally launched in the market. We expanded our count of active [ AMCs ], other AMCs that work with us. On the overall mutual fund AUM, the first 6 months of this year and the quarter have been the best ever in recent times in terms of absolute and percentage expansion of assets. Our overall assets at the end of the quarter stood over INR 32 lakh crore, you see a number of INR 32.2 trillion.

This went up 20% year-on-year. And on a large base, that certainly, a very significant number. Overall, market share continued at 68.5%. Equity AUM crossed INR 15 lakh crores end of the quarter was INR 15.2 lakh crores. This registered a 28% growth year-on-year. As you are aware, and our equity market share expanded by almost 120 basis points, so it's now 65.5%. A year back, this would have been 64% and some change. So that's on a sustained increase. Also in the first quarter, we have shown you our equity net sales market share, which was in the 90s in the first quarter, which obviously a 90% share of anything kind of look like an aberration, but very happy to share with you that it's holding up quite well.

Net sales is really the net money that comes into the market from investors. We had an 80% share in the second quarter, and this is primarily the reason why the equity asset market share has gone up. Outside of mutual funds are overall, and I'm giving you a 1-year picture from second quarter last year to this year. About 3% or 300 basis points increase year-on-year in the share of non-MF revenue. This was in the range of 10%, just short of 10%, 1 year back in the second quarter. It's now about 13%. How did this happen? Non-MF revenue if I take absolute numbers grew 47% year-on-year. If I take out the onetime contribution of Think360, it is still 30%, which is a very [ salutary ] number.

You know that we were talking about an overall earnings compounding of 15% saying non-MF should be growing in the 20s or beyond that. So this was a great [ reference ] 30% non-MF growth. In alternatives, which was in a sweet spot for us, we went past the INR 2 lakh crore or INR 2 trillion overall assets under management under administration number. And then CAMS KRA, which is a product where we were focused on mutual funds till about 1.5 years back. We started planning a complete revamp of the platform and from a product perspective to stay ahead of the peers and also to make a strong go-to market efforts.

I think all of that has done very well. CAMS KRA has grown almost 100% in revenue in the last 1 year, 2Q to 2Q. So that's been a great story too. So you see the financial highlights. As you know, you've read all of this. Revenues are [indiscernible] 13.5%. EBITDA up 15.5%. EBITDA percentage at 44.5% is almost 70 points up year-on-year. And then profit after tax grew 17%. So overall, just a strong story across all key metrics across businesses. Some of the stuff that's on the other chart, I think, in summary, I may have covered, but I'll just go through this. Transaction volumes you see was historic high, crossing about 14 crore transactions in a quarter, solely on the unique investor growth. We are now getting very close to 3 crore unit investors.

That's about 2.83 crore. Equity gross sales, again, you see about 67% share in the market. But what stays back with us, [indiscernible] gross of redemptions. When you net it out, that's a 99% share in the last quarter, 80% in this quarter. And again, this is a great number to have on our side, of course, we have to constantly watch it. This is the cumulative impact of how our AMCs and their teams are performing in the market in terms of their relative share of sales. But I would say a great number for us to have on our side. And similarly, as you've seen, the SIP [indiscernible] continues to move in terms of overall SIP registrations in the market.

CAMS individually is now registering anything would be 60 lakh to 65 lakh process IPs. In a quarter, you see a number of over 30 lakh or 3 million net SIPs net of redemption net of SIP expiry and withdrawals. So that's the great number too. We've never had a number as large as that. And driving on all of this live SIP share, like you can see, has grown from 56.1% in 1 Q2 too. It's grown about .7% for these [indiscernible] days in the September quarter. Similar numbers when you just juxtapose them with the market. I'm sure you've been watching these numbers closely, so I will not go through this individually.

I think overall equity share gain and equity tax sales overall share has been a great story for us. So has been [indiscernible]. From a transaction volume perspective, you can see almost a 24% year-on-year growth. Points to a degree of retailization when productions are moving faster than AUM and moving faster than revenue growth. But that's a great story again because the middle of the pyramid and going towards the bottom is really where a lot of participations welcome in these markets as individual transaction sizes and commitments by investors continue to become smaller. But that's a great sign of participation. SIP book. I spoke about that, grew about 24% year-on-year, 8% in the quarter.

You see similarly live folios grew about 18% year-on-year and unique investors was 17%. Systematic transactions processed. This would be SIPs that we trigger and collect against each year and grew about 13% on a year-on-year basis. From an overall, and I'll give you a short commentary of each of these businesses. As you can see on alternatives, the story continues to be very strong and steady. We won, from a full service perspective, 15 new accounts logos in 2Q. WealthServ now we've introduced WealthServ, which is a several markets and steps ahead in terms of digital onboarding and servicing of investors. We have 100-plus clients that we are naming in the past who have now adopted a digital onboarding capability on AIF.

Temenos Multifonds, which is part of the fund accounting suite, which we announced in the last quarter, is now ready to take on clients. So we expect to report this to be live and in service an about 2 months from now. We also built out a [indiscernible] limited launch of our first analytics platform, WealthTrak, which will -- which will aggregate data on the alternative side, largely on AIF and then provide [ contracts ] just like we do in [indiscernible] . But also very importantly, in Fintuple, which is [Audio Gap] we probably in the past bespoke work has a near conclusion of a very large transformation in one of the top private sector banks.

You will see some announcement come from us in December. So this is starting from the [indiscernible] operations which basically integrates every other component of the alternative operating arena and creates ability for them to share data, onboard investors and just takes out on the [indiscernible] from the operating setup. So you see from the last point in December and as the platform goes through a formal launch. So this is a very synergistic offer in some other it is video capacity capabilities from both CAMS and the Think360 and several other things, including [indiscernible] operations for AIF, but it blends all of that. And you will see some media interest on this in December.

From a -- [indiscernible] perspective, I think the great number is that we are holding at about close to 10% market share. This seems to be small [indiscernible] till about 2 to 3 quarters back. Our number of live FIUs continues to expand and has crossed 50. And I must say that while this was thought of mostly as lending use cases, in terms of small ticket lending, particularly digital lenders adopting account aggregator for credit more than as of individuals. The other use cases are now becoming very popular. So large broking houses are using this for F&O account opening incorporating bank statements. and are now getting bolstered. Similar to third-party verification or use case is now live in some of the brokerages and MS, et cetera.

So non-lending use cases are now we are in prominence. Of course, this will happen over few quarters or years, but it's a good first time to see in the market. From a payments perspective, we continue to expand and do well. UPI AutoPay, like we said last time was continuing to get adopted and may become over a period of time as the preferred option for SIP payments and recurring payments for individuals. CAMS KRA, this is something that I alluded to and you may have seen some press and a lot of information on our website, et cetera. So we brought up this 10-minute KYC solution where it enables almost instant onboarding from a brokered [indiscernible] account and it's our perspective has become a very popular solutions. And when you bring in all the components of technology that we've done, which is things like OCR and Face match, Liveliness checks, et cetera.

It used to happen in a -- lagged in time kind of format, which is all now getting done quickly, the [ algos ] and the technology enables all of this. And that's what has enabled us to broaden out the offering to bring in both fintech and brokerages. It was largely a mutual fund focused offering. We were selling likely to [ MS ]. But we've gone beyond that. So we see 3x increase in monthly volumes, but importantly, almost over 100% year-on-year revenue growth. This, of course, was on a small base. The base is larger. Would we expect to see more growth in the coming 12 months as some of these operations stabilize, large customers continue to opt for us and then existing customer scale. We expect this to continue growing in the next 12 to 24 months.

From a repository perspective, you will see -- and this is now available in both -- it is available in both the play store and the app store, capability called [indiscernible], which essentially allows you to open a PI account and then start listing your policies. But over a period of time, it will allow you to do various other things, including, like I said, making payments as a regulator [indiscernible]. To do lean marketing and borrowing money against your policies. We're seeing a single screen with all surrender values, et cetera. So various augmented capabilities. Now this requires us to tie up with all the almost 50-odd insurers, both in life and non-life. The good news is that the top 5 have now been signed up for this.

Also from an overall policy perspective, we are 40% up year-on-year in terms of eIA edition. And like we said, there is sustained impact while the eIA was [indiscernible] product for the life insurance sector. Now the non-life insurance showing sustained past on this. So as we continue our journey -- continue expanding the number of eIA accounts [indiscernible] of opening an account frictionless, listing all your policies and then value-added services of the [indiscernible], we will see a lot more address. Of course, we pay requisites to bring every insurer on board.

That's a process that will take some time. We have for this is a unique product. This was not available with any of the depositories today. And we're expecting to scale on the back of these capabilities across -- there is no change in the overall regulatory position on insurance policies being pushed into [indiscernible]. So that remains as an item, which is under work, under progress but have not finally been declared as [indiscernible] . From a CRA perspective, we've continued to make inroads into the POPs and some progress in the corporate segment. So we typically retain the #2 position in eNPS. And then from a Think360 perspective, we've continued to [Audio Gap] the 3 key products.

And that story is going well. From an intellectual property perspective, the PFM module on Account Aggregator's now fully built by [indiscernible] , and we have acquired several customers. Think has also introduced some market Geo-Wealth Index, which is able to take [Audio Gap] [indiscernible] address and through various direct and surrogate means is able to establish the potential wealth capability of the individual [indiscernible] in that space. And similarly, we're doing some work around generative AI finding use cases in the market to be able to sell this profitably. So that's the overall story on Think. Like I said, both from a [indiscernible] perspective, we continue to scale and sign new relationships.

So that's really it in terms of overall operating highlights and what's happened in the different businesses in terms of scale, shares, volumes, et cetera. I will hand over to Ramcharan so that he can speak about the financials.

[Sesha Ramcharan, executive]

Thank you, Anuj. I'll just spend a couple of minutes on the [indiscernible] financial numbers. As Anuj mentioned, this was a strong quarter for revenue as well as from a profit perspective. So revenue for the quarter was INR 275 crores, which was up almost 13.5% year-on-year and 5.3% quarter-on-quarter. The revenue last quarter, if you recollect, was around INR 261 crores and the last year same quarter was INR 242 crores. This was on the back of a smart growth in the AUM and the mutual fund revenue. The AUM on a year-on-year basis grew more than 20%, translating into an MF revenue growth of almost 10%. And on quarter-on-quarter, the AUM grew by 8.7%, translating into MF revenue growth of 5%. So on tracking this smart growth in AUM, we have been able to grow the revenue almost in line with the growth of AUM on a quarter-on-quarter basis. The asset-based revenue grew 9% and 6% on year-on-year, quarter-on-quarter.

We are at INR 202 crores almost of asset-based revenue. The non-asset based revenue grew 13.6% year-on-year. We have seen some uptick coming in the applications that we run, including [ MF Central ] and various other applications and platforms that we license to the mutual funds. So that's seen a good momentum and continuing momentum on the revenue, and there has been some increase in the call center too, on both the year and quarter, translating into a smart growth on a year-on-year basis of 13.6% on the non-asset-based revenue. Currently, the non-asset-based revenue, third quarter is around INR 38 crores. Non-MF revenue, Anuj touched upon this. We have seen a good growth in Non-MF revenue, almost 47% on a year-on-year basis, equalizing for [indiscernible] acquisition, which was not in the pace.

Even then it's at 30%. So we have seen what we have estimated a little ahead of what we estimate in terms of the Non-MF revenue growth, and that's translating into the percentage of non-MF revenue being close to 13% for the quarter. On a unit quarter-on-quarter basis, we saw an uptick of 7.4% on the Non-MF revenue. So the Non-MF revenue is currently around INR 35.5 crores of the overall revenue. So we're continuing to see positive trends on this, especially on the KRA business. We are seeing stable to improved revenue from a AUM perspective.

Payments is continuing to do well in terms of the ramp-up that they are seeing in the number of transactions. So all in all, we are on track to meet our targets in terms of increasing the pay of non-MF revenue. The asset mix you'll note for the quarter is actually very favorable. The equity component, which used to be around 45% last year is now 47.7%. And hence, it's translated into some benefits for us in terms of data. On the yield commentary, I think in the last couple of quarters or more than that we had indicated that a large contract that is being renegotiated after 5 years, and we had indicated some impact of that will be felt. And during the last earnings call, we had clearly stated that there will be some spillover impact in the current quarter, post which we believe that it will be business as usual. Happy to say that, that's been the actual case.

And we have concluded the contract, and we are seeing some scalar impact of marginal decline in yield in the current quarter. But going forward, our estimate is that we will not see any unusual yield movements. And it will be restricted to the impact of the telescopic pricing, at least for the foreseeable future or the next few quarters. So that's the commentary on the yield. Hence you will see a small depletion in the yield, but we feel that the impact of all the [indiscernible] has already been considered, and we do not see any big impact going forward on the yields, other than the telescopic impact.

On the profit perspective, backed by the growth in revenue as well as some operating leverage, productivity and automation, and some cost control measures, you will see that we have ended the quarter with a 44.5% EBITDA, which is equal to or better than the margins that we saw in the earlier many quarters, right? So we ended up the -- the ended the quarter with an operating EBITDA of INR [ 132.5 ] crores as opposed to INR 110 crores and a 42.2% in Q1 of FY '24. And last year, we had INR 106 crores or 43.8% EBITDA. So we are seeing an uptick in the margin as well as absolute number in terms of the operating EBITDA. This is translating into a margin both even from PBT and a PAT perspective.

And for the quarter, our PAT percentage was close to 30%, 29.7% with a PAT of INR 84.5 crores. Again, trending upwards in terms of the margin percentages reflective of our cost control as well as the operating leverage that we feel is flowing into the bottom line in spite of a small depletion yields that we are seeing in the top line. Our return on network continued to be impressive at more than 42 percentage, and we ended the quarter, 30 September, we had a cash and cash equivalent of INR 528 crores.

This was after payment of [ dividend ] of INR 98 crores during the last quarter. And the Board was pleased to declare an interim dividend of at least INR 10 per share in their meeting yesterday, [indiscernible]. So when you see the trend going forward also -- when you see the trend in the later part of the presentation, you will see that the margin trend has led the revenue and the PBT percentage through numbers seem to be trending upwards, which is reiterating the commentary that Anuj has given in terms of this being a strong quarter and looking forward to maintaining and minor improvement in margins going forward as we think we have seen the worst days over in terms of the yield compression for the last few quarters. So this is the commentary I had on the revenue and profit numbers. I'll hand it back to the moderator. They can open it up for questions.

[Operator]

[Operator Instructions]

The first question is from the line of [ Mr. Santosh Keshli from Keshli Finance ].

[Unknown Analyst]

Okay. I just had one [indiscernible] . When you say telescopic impact of the revenue legislation in over...

[Operator]

[Operator Instructions]

[Unknown Analyst]

Okay. Am I on audible better now? So I had just one question. When you say that the telescopic impact of the venue initiation over, what exactly do you mean by that? I don't understand term telescopic.

[Anuj Kumar, executive]

Sure. So let me just try and explain that. The pricing structure that we have with our mutual fund customers is actually scale based, which is that there is no single bps rate that we charge for the assets under management. So we broadly divide this. And while the rates may be different for different customers, this structure is broadly the same for all the customers.

There are asset class bps that we agree upon, for example, equity, debt, liquid and others or GTFs, passes, et cetera. So for example, take the equity, the rate of [Audio Gap] that we arrive at for a particular customer is not the same. And as the AUM keeps growing, for example, if you had a INR 5,000 crore AUM of equity, assuming that your bps was say 7 bps. If you get to the next INR 500 crores, the rate will fall from 7 bps to 6 bps, 4 bps and 5 bps. So as you grow in AUM, the marginal billing that you do or the marginal cost for the mutual fund customer keeps decreasing. This is a deliberate in-build structure that is there in the pricing agreements with our customers to ensure that the benefits of scale gets passed on to the customers without them having to come back to us.

Every time that there is a big growth in assets. So typically, what we see is as the assets keep growing for the mutual customers, if your asset growth to say 10 then my asset fee growth is generally between 6 and 7, which is that we have a 30% depletion that generally happens sometimes 25, sometimes 30 that happens between the growth that you see in the assets with the growth you see in the asset fee, which is what is called the telescope pricing structure.

[Unknown Analyst]

Okay. So -- sorry, then what exactly is meaning of telescopic impact? The grade [indiscernible] increase or decrease is not going to happen anymore.

[Anuj Kumar, executive]

Sorry, what I said was barring the telescopic pricing impact because the rates generally go down because of a, telescopic pricing because of any renegotiation, large renegotiation that happens on the base [indiscernible] with the customers. We had indicated during the last few quarters that a large customer's contract for the last 5 years was renewed just now with a decrease in rates. What we indicated was the impact of that will not be felt further. The only impact you will see will be the impact of the telescopic pricing.

[Operator]

[Operator Instructions]

The next question is from the line of Mr. [indiscernible] Desai from ICICI Securities. [Operator Instructions]

There is no response from the line of the current participant.

[Unknown Analyst]

Hello. am I audible now?

[Operator]

Yes, sir, you're audible now.

[Unknown Analyst]

Yes, sorry for the technical problem. My question was related with the yield movement. As you said that there was some effect of the yield effect in this quarter. [Audio Gap] way going ahead also in this quarter, we also saw a big AUM jump. So part of the impact is also because of telescopic and part of it would be because of the yield reset. Any color which you can share on the extent of decline that we have seen in this quarter because of the yield reset, which will give us a better idea about what to take the end assumptions for the coming quarters and also the year end.

[Sesha Ramcharan, executive]

So the way to talk about this is you saw a 20% AUM expansion 2Q to 2Q, last year to this year. Normally, you would have seen about 14% to 15% revenue growth. What you saw is about a 10% revenue growth. The 50 minus 10 is perhaps a [Audio Gap] not equivalent of what you're asking for, right? If we did not have that onetime adjustment, then we would have delivered the 14% to 15% on the overall asset growth, which was only 10%. The 15 minus 10 is then approximately the impact of whatever we're talking about.

[Unknown Analyst]

Understood. Understood. So going ahead, it will fall back to our historical way of -- way of decline, which is in line with the telescopic thing, right?

[Sesha Ramcharan, executive]

That's correct. That's correct. So if assets let's say, in the next 12 months grow 20%, there's no reason that revenue will grow only 10%, revenue should grow 14% to 15%.

[Operator]

[Operator Instructions]

The next question is from the line of Dipanjan Ghosh from Citi.

[Dipanjan Ghosh, analyst]

Am I audible?

[Anuj Kumar, executive]

Yes, you are.

[Dipanjan Ghosh, analyst]

Sir, just a few questions. First, if I look at your non-asset-based [Audio Gap] revenue. On a quarter-on-quarter, it seems to be a given that there are a lot of activities going on in the mutual fund space in terms of lead on the market being down. So I would have expected that mutual funds a little bit more on the spread. So if you can give some color on that? That's question number one. Question number two is on your non-MF revenues. [indiscernible] KRA business and look at other businesses for momentum perspective sequentially.

Like if you look at Think360, over there, it has been relatively flattish or down on a Q-o-Q. So the other businesses have also been not that great in terms of momentum uptake on the revenue side compared to, let's say, the client frames or lower in or specific expansion side. Just wanted to get some color on that. Lastly, in terms of expenses, can you give some color on incremental cost that you need to incur on the new businesses? And what sort of EBITDA trajectory should we [indiscernible] ?

[Sesha Ramcharan, executive]

So thank you, Dipanjan. I'll take the question on the non-asset-based revenue as well as expenses. And I will request Anuj to comment on the non-MF business. See the non-asset-based revenue, you know that there are 4 components, major 5 components made of it, is the transaction based, the [indiscernible] is application-based we call syndrome. The force that we build for and the out-of-pocket expenses. What we have seen as a trend is in the last quarter, we have not seen any big increase in the time action-based assets from a paper transaction perspective. What we have seen is some moderate increase that's happened from a call center and from a machines application perspective.

So while year-on-year, we do see a good increase in terms of revenue. Quarter-on-quarter, it has been flattish. What we expected, and again, as I was earlier mentioning, we do not expect the nonasset-based revenue to kind of profile any growth for us or to cover any profit as far as because basically, the transactions being up or down does not incrementally impacted profits. So we would assume that there will be static within the same levels that we are seeing now. The only upside that we could see is some increase because of the MF central related revenue that is the application base. That's the only increase that we could probably see to be profitable growth in the entire bucket that we see there. Hope because of some reasons in terms of issues and I'm looking sound come on the [indiscernible] and grow them. But all those things are compensated in a decrease in revenue.

So that's the reason for the nonasset-based revenue remaining static on a quarter-on-quarter basis. From an expenses perspective, I think the major expense increase that you will see will be the salary expenses. Even on a year-on-year basis, my entire salary head has increased by INR 7.6 crores and that includes the salary impact that we've given in April, which is more than INR 6 crores.

So we have been remarkably disciplined in terms of adding manpower or regulating the cost from a manpower perspective. It includes the [indiscernible] cost increase, it includes setting analytics cost. Everything put together on a year-on-year basis, we have increased cost in salary additional INR 7.6 crores. So we feel that going forward, there will be stable cost that you will see. in terms of quarter-on-quarter basis, if you see the increase in revenue is almost at INR 13 crores, and the increase in EBITDA is INR 12 crores. So that could not be replicated every quarter going forward. We feel that the incremental cost will be measured. It will -- and we generally expect 50% to 60% of the increase in revenue to flow down the EBITDA in our normal quarter.

So from a fixed cost perspective or from an operating expenses perspective, operating expense generally remain at around 7% to 7.5% of revenue. That's why they will continue to remain if you move the OT part of it. The [ TOB ] will be around 12%. The trend has been remarkably stable across the last many quarters that we have seen. The employee expenses as I said since we're able to come, we are in fact seeing a downward trend. It's a little more than 34% of overall revenue. And your fixed expenses, even on a quarter-on-quarter basis, you have seen this decreasing.

And a couple of quarters back, there was a concern raised regarding [indiscernible] fixed expenses on it. And I [Audio Gap] expectations saying that you will see this is the peak, and you will not see a lot of increase, other than inflation-driven increase going forward. I think that's what it's care the last couple of quarters too. I will kind of wait for any questions from you on this or Anuj can probably take the question on the non-MF.

[Anuj Kumar, executive]

So on the non-MF revenue, while we've stated that overall year-on-year growth was 47%, netted for the onetime Think analytics revenue, which started accruing in the first quarter, that's about 30%. You're right, in this quarter, KRA has really driven a lot of this growth. Now last quarter also KRA [indiscernible] on growth. This has been a substantial quarter from a [indiscernible] contribution perspective. However, from our overall sales focus and signings pipeline, et cetera, we are very sure that the others, which is CAMSPay, Think360, AIF and insurance will be large contributors in the coming 2 quarters. But in this quarter, you're correct, the large part of non-MF increase outside of Think has been driven by [indiscernible].

[Dipanjan Ghosh, analyst]

Sure. Just if I can have 2 more follow-up questions. One on your AIF side. On the incremental side, your competitor highlighted that they have moved from a flat fee based slab to more of a AUM linked slab like you see in mutual funds. I just wanted to get some color on whether you have also made some changes on that part. Second, more of a structure question. Let's say, in this quarter, for example, mutual fund -- or last 2 quarters, mutual funds have seen very sharp growth in AUM and some of them have seen change in slabs for themselves on the gross [indiscernible] side. Your contracts are more from a 2-, 3-year perspective. So when they say can you slab, is it like a direct translation that you have built in in the contract? Or how does it happen? Or do you expect free negations to be much more frequent? And is this sort of a market trajectory, let's say, constant hypothetically?

[Sesha Ramcharan, executive]

Sure. So when you take the first part on whether AIF are moving from flat pricing, to a bps pricing, we are not seeing that. We are not seeing that.

And you must -- I'm sure you appreciate that the market, if I juxtapose what it was 2 years back to what it is now, is a lot more competitive. There are a couple of global players who are competing, the domestics both us and our key competitor. So also [indiscernible], in those kind of competitive scenarios, not easy to change our pricing paradigm. The current pricing model works well for us. So it is continuing the way it is. No large changes. WE are not reporting any large changes. On the Mutual Fund [ 5 ], just think of as 2 separate trains. And how do the 2 separate trains move? Mutual funds when they grow, they will charge as per the TER slab. But TER slab can continue falling from -- you know the numbers, right, from [ 4% to 5% ] all the way down to, let's say, 1% and some change.

So that is something that the mutual fund experiences. What we experience is our pricing contract with them, which is saying that the telescopic impact, I'm just throwing a number may not be very accurate. Let's say the telescoping impact is 2%. So we will see -- our contraction, irrespective of what change in fees they are doing. Are they using the argument of their change in slab and they changing fee to negotiate something else -- without the answer is no. While they are seeing, I'm sure there are many schemes which have crossed over to higher and higher slabs.

It's also a fact that our telescopic methodology keeps rates at very, very affordable levels, but it's not a [indiscernible] between what they experience and what we experience.

[Dipanjan Ghosh, analyst]

Got it, sir. And if I can -- sorry, one final question on the account aggregator side, rates have stabilized. Is that surprising or is the pricing pressure out there?

[Sesha Ramcharan, executive]

Yes, they have stabilized. The rates are maybe 20%, 25% of where we had started, right? So they have stabilized to a certain level. Competition, of course, in both [indiscernible] is enhanced. But yes, we are seeing some stabilization of rates now.

[Operator]

The next question is from the line of Mr. Lalit Deo from Equirus Securities.

[Lalit Deo, analyst]

So I have a couple of questions. So firstly [indiscernible] so that the -- could you [indiscernible]. Yes. So on the AIS revenue piece. So like if you see the overall AUM growth in the AIS segment, sir, that has grown materially during this quarter, but since the revenues have not grown -- have remained broadly flattish on a sequential basis. So do we expect that from this growth in the AUM revenues could come up in the coming quarters? That was the first question. And second, like you mentioned like that because of the renegotiation happening. There was some kind of pressure on the revenues. So do you -- so what is the pipeline over the next 12 to 18 months? Like is there any major contract negotiation going to take place with our major fund clients?

[Anuj Kumar, executive]

Correct. So from a year perspective, we've seen a steady pipeline of signings. And therefore, yes, we are expecting that the growth numbers that we've been reporting in the past should be back in the coming 2 quarters. We're quite confident of that. The AUM does continue to grow. Every pricing is not AUM linked. A lot of it is active dealing pricing.

But that notwithstanding, we are seeing significant growth coming back in the next 2 quarters. From an MF perspective, you can see that we have [indiscernible] stated that there was a large contract where we were resetting prices. This is some historical context, that exercise is now over in the second quarter. There is nothing major, which we believe, and that was like a once in 10-year event, and you've seen that we saw price depletion in a sustained manner for about 4 to 5 quarters. In the next 4 to 5 quarters, we do not see any event like that happening again. So like Ramcharan said, you can expect a marginal small telescopic rate-led depletion. But nothing major from a [ negotiation ] perspective.

[Lalit Deo, analyst]

Sure. And sir, just last one data related question, like you mentioned the clarification. Like you mentioned that expenses will be a part, will be 12% of our revenue, below 10% of the revenue? Or was it something else?

[Anuj Kumar, executive]

Sorry, can you just repeat your question, please? Sorry.

[Lalit Deo, analyst]

Sir, the other fixed expenses, like as you mentioned that the operating expenses will be like below 8% of the revenues. And then there was some 12% of the revenue. So I just missed that part.

[Anuj Kumar, executive]

No, I think what we mentioned was operating expenses if you take the out-of-pocket expenses, right, which is included in the operating expenses as well as in the revenue. If you just do a division of the 2, it comes to 12%. But if you remove the out-of-pocket expenses from the numerator and denominator just from the sales as well as the expenses, the operating expenses that we incur, which is mainly from data entry cost to the sponsored bank charges that they do for the payments businesses and some things like that. The amount [indiscernible] is generally between 7.5% to 8%. That was what I was mentioned on this 12% [indiscernible] .

[Operator]

The next question is from the line of Mr. Abhijeet Sakhare from Kotak Securities.

[Abhijeet Sakhare, analyst]

I joined the -- some of it could be repetitive. Sorry for that. The first question is that on the non-MF side, there is a little bit of volatility on the insurance -- if you could explain that first? And secondly, let's say, on a 12-month basis, is there like a visibility on -- could be the group all of these businesses put together, I think we are delivering somewhere close to about 20%, 25%. So does that run rate still hold when you look forward 1 to 2 years? Second question is that -- when we look at the overall EBIT margins at around 40%, is it possible to kind of break it down how the [indiscernible] business is doing and the rest of the business is doing? And related one is that -- are we largely done on the investment fund on the non-MF businesses. So from here on, the translation of revenue growth to bottom line as Ramcharan mentioned earlier, that should kind of continue as well.

[Anuj Kumar, executive]

Sure. Sir, on the insurance side, while we were reporting growth in eIA accounts and policies. You are aware that there's a large faction of the revenue, which still comes from outsourcing services. In our persistency operations, there was some fall off from last year to this year, which is why you've seen a small deviation in the overall insurance revenue. From a non-MF perspective, we've stated that we would like to grow 20% in revenue terms. And right now, for the next 12 to 24 months, we'll be just holding that number, we expect to grow 20% plus in the overall non-MF portfolio for the next 1 to 2 years. So we're [Audio Gap] that number. On the third part of the question...

[Sesha Ramcharan, executive]

EBIT. So, Abhijeet, on the EBIT part of the it -- yes the asset bucket , the non-MF if you kind of combine the non-MF with MF, I think that was your question in terms of what will be the split between the 2. See, your MF EBIT is obviously on the higher side. It is much higher than the 40% [ 24% ] EBITDA that you're seeing there. But having said that, I think if you look at do not ever 20% less. But within that [indiscernible] is also equally profitable and can reasonably profitable. So non-MF, yes, MF as higher EBIT than the remaining things.

But within non-MF, there is a bucket like [indiscernible] or payments, it continues to be very profitable. So that's basically the numbers will get -- pan out. Is actually very profitable. [indiscernible] Is a platform-based business. So that's not really high. So that's how it breaks out.

[Abhijeet Sakhare, analyst]

And that 20% growth rate on the revenue front for non-MF does that deliver even better growth rate on the EBITDA or EBITDA fund?

[Sesha Ramcharan, executive]

It will, for sure, because as we said, from an insurance perspective, fund payments, the platform is ready. And we would -- the incremental policies that come on board in the PMA center, if it goes in -- and it goes like this quarter and start getting some traction from a revenue perspective. We feel that it will be accretive to the EBITDA. And hence, as a business, I think both insurance and the payments business could see some uptick in margins. [indiscernible] payments, maybe.

[Abhijeet Sakhare, analyst]

Got it. And last one, the core RT business. From a OpEx front, there is nothing like a lumpy expense in the pipeline, right, like all the cloud tech related expenses, regulations, all of that is behind us, right?

[Sesha Ramcharan, executive]

So yes, that's right. From an OpEx perspective, we do not see a big lumpy expense that needs to be done from our side. However, if there is a big project that we are doing from a technology perspective, we would probably have to think about it on that will be more long term. So on the immediate few quarters from an OpEx perspective, we do not see any lumpy expenses that are going to come to you. Although regulations do continue to come in fact, even from a KRA perspective, there have been regulations on invitation of infrastructure and [indiscernible], et cetera. But we are confident of keeping those things under check, and you will not see a big lumpy expenses that's coming.

[Operator]

The next question is from the line of Mr. Prayesh Jain from Motilal Oswal.

[Prayesh Jain, analyst]

Firstly, on the core business of -- we've seen a lot of additions coming in from the fintech platform. And the transactions that we are doing are coming in from fintechs more than earlier where we see a lot of [indiscernible]. So do you think does that incrementally contribute any form to the revenues, apart from the AUM that they add? Or how much of our revenues would be kind of have some linkages to the number of transactions as well? Any clarity there?

[Anuj Kumar, executive]

So first [indiscernible] this way that train has been moving for many years now. Think of it as having been moving for the last 5 years. We have [ single-crew ]the paper transactions that are in single digits, which we the digital electronic is [ 1991, '92, '93 ]. That kind of gross portfolio level paper is 12%, so 88% is non-paper. Paper, like we've said, is not -- is a revenue-accretive but not margin accretive. It also bears the risk because once we digitize the paper, then everything else is identical in our system.

The process of digitization takes effort, cost and introduces a former price. So we are very happy with the way things are. Also do remember that the fintechs have brought scale to this market, the scale was unavailable to the market in the traditional distribution paradigm, different type of broad scale and a broad market sizes, which are much smaller. So overall, if you see, we do book revenue from paper transactions, which is not a very large number. And even if you were drying and it was drying them for the last -- I mean, as long as I can think, last 7, 8 years, every successive quarter, it would have dried up. But the scale, the efficiency that it brings into the system is accretive to us and takes out a lot of labor and a lot of risk. So that's a positive moment for us. The revenue is a very small sacrifice to make.

[Prayesh Jain, analyst]

[indiscernible].

[Anuj Kumar, executive]

Your voice seems to be breaking.

[Prayesh Jain, analyst]

Can you hear me?

[Anuj Kumar, executive]

Yes, go ahead. Much better.

[Prayesh Jain, analyst]

Yes. What I'm saying is INR 100 set will still get you eventual a 3.5 basis point yield and same [indiscernible] will fetch you the same yield. Is that a fair way to look at it? Or is there some -- some cost angle, both would require same amount of efforts all from your side out. Is that the right way to think?

[Anuj Kumar, executive]

Yes, absolutely. That is the right way to think. But from an AUM perspective, the INR 100 set will be much smaller. It will take a long time to create a mass and recognize INR 1 lakh set will be very different in character because it will create you much faster. But think of the INR 100 SIP in millions, while we recognize [indiscernible] will be a few hundred or a few thousand. So when you see this [ case ] we've crossed now INR 10,000 crores of net monthly SIP collection at discounts level, during the COVID period, it used to be [ 4 ].

So in less than 3 years, we are almost 2.5. That kind of scale has been built on distribution and built on this creation of small [indiscernible]. Is not built on [indiscernible] participation in this market as you can see. So that's really why I think the market is going in the right direction.

[Sesha Ramcharan, executive]

The only thing I'll add to your question is Prayesh, is that the purpose of this SAP collection treater is largely automated. So if your question is whether you [Audio Gap] to incur the cost, the incremental cost, it will incur hence INR 100 is not very beneficial to you. I think the process is largely automated and hence, that would not be a big part in this.

[Prayesh Jain, analyst]

Got it. Okay. The other part was on the account aggregator piece, in that the B2 banks are still finding it challenging or apprehensive about coming on board for the -- on the account aggregator's platform. And tell me what's your sense there? I mean earlier, whenever we interact, you said FY '24, we'll have much more clarity about when this account aggregator will start contributing to our revenue stream. So any thoughts on these 2 aspects of the account aggregator?

[Anuj Kumar, executive]

So from a participation perspective, every [indiscernible] bank is on board, each one of them. In fact, most of the private sector banks are on board. These smaller regional rural banks are coming on board. What you are observing, but you're actually correct, what you're observing with the public sector banks is that they may not have built a [indiscernible] all the fintech technology for data transmission to be 100%. So if we send 100 requests will all 100 get answered? The answer is no. Typically, in exchange like this, [indiscernible] should get answered. If you answer it will be kind of 20, then there is something wrong which needs to be fixed.

So there are small incidents of that kind, but from a signing and formal participation perspective, all of them are there. I think we are seeing signs of revenue and that revenue will be -- this year would be maybe a few crores, right? So it could be a INR 2 crores, INR 3 crores, INR 4 crores number, as we progress. But it's a good number to have because in the beginning of our revenue stream, we are pushing through transactions, we have integration charges and sign-up charges.

So all of that is happening. Of course, like we told you that price depletion has been almost 80%, what used to sell for INR 10 is selling for INR 1.5 to INR 2. So revenue has contracted to that extent. It still remains a very exciting market. I think the good thing to focus on is how many use cases are emerging for how many physical actual labor-intensive [indiscernible] can you find a substitute to account aggregator. And like I said, whether it is a small ticket digital lending, whether it is account verification, part of the KYC process, MF onboarding, third-party verification of bank of accounts. There are multiple uses. So if you keep your eyes on that, you will find that slowly the manual process will get phased down from the country and these revenue scales will be much larger than what I'm talking about right now.

[Prayesh Jain, analyst]

Understood. And last bit on the EBIT margins. You mentioned that there are the non-MF businesses are at lower margin as compared to [indiscernible] businesses. But it's more than that. [indiscernible] reasonably good margins. But any of these businesses that can [Audio Gap] the business margin say, [Audio Gap] in the next 2 or 3 years, thoughts there?

[Anuj Kumar, executive]

So I will just give [Audio Gap]. We have achieved platform capability, which means I have [indiscernible] of small units. I don't have to deploy [Audio Gap]. All I need to deploy is storage, service, connectivity, ability to manage it. Business [indiscernible] EBITDA, a great example which is delivering that margin as of today, after our AIF business [indiscernible] for that margin. So they are very close to the MF margins. Payments have undergone some in pressure recently, so maybe a little lower.

But as payments, let's say, another 30%, 40% in size. So the good thing about the business is so well in terms of repository, you can think that as a business [indiscernible] as a scale of business to, let's say, INR 25 crores of revenue, INR 20 crores, INR 25 crores, it is possible for that business to be at 40% margin. And we are seeing that in MF. We are seeing that in KRA. We are seeing that in AIF. And the ones to watch out for our, let's say, payments and insurance, where you'll start seeing similar character maybe 3 or 4 quarters from now.

[Operator]

The next question is from the line of Mr. [indiscernible] from Nuvama Wealth Management.

[Unknown Analyst]

Okay. So for Mutual Fund business, transaction volume grew year-over-year 24% and Q-o-Q, 10%. So how is it contributing to revenue or cost, if you can [indiscernible] about that?

[Anuj Kumar, executive]

Most of this was digital volume. Most of it is digital volume. If you see, we do about INR 60 crore transactions for the year, INR 55 crores to INR 60 crores. Over 80% of this is SIP triggers. And that's a completely digital process from the time we collect all the information about the SIPs being live to a [indiscernible] facing them with the sponsor bank, NPC, et cetera, to collect the payment to creating the units. It's completely untouched by hand. So there is no real cost implication there. I used to [indiscernible] a few years back, I'm triggering INR 4 crores. I would also [indiscernible]. But the quality of processing that we've built in automation is not really cost accretive.

From time to time, we will add some capacity and storage, et cetera. But there will be no labor in this, which is managing [indiscernible] .

[Unknown Analyst]

Okay. And any increment in revenue for the transaction volume?

[Sesha Ramcharan, executive]

So generally, most of the digital transactions figures, SIP, et cetera, do not result in any incremental revenue also. It's only the paper transactions that generally are giving us revenue in terms of [indiscernible] Transactions being processed. So these could not have a large impact on revenue and cost.

[Operator]

That was our last question. I would now like to hand the conference over to Mr. Ramcharan, CFO, for closing comments.

[Sesha Ramcharan, executive]

Thanks, [indiscernible], and thank you to all participants for your participation in the call and the continued interest you are showing in CAMS. Please feel free to reach out to either [indiscernible] or Anish Sawlani, Investor Relations for any questions that you may have, and Anuj and me are also reachable in case you have any media clarifications. So again, thank you for being part of this call.

[Operator]

Thank you. On behalf of Computer Age Management Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.