Computer Age Management Services Ltd

NSE:CAMS

Earnings Call Analysis

Earnings Call Transcript 2025-Q2

[Operator]

Welcome to the Q2 FY '25 Earnings Call of Computer Age Management Services Limited. We have Mr. Anuj Kumar, Managing Director of CAMS; Mr. Ram Charan, SR CFO; and Mr. Anish Sawlani, Head, Investor Relations.

[Operator Instructions]

Please note that this conference is being recorded. I now hand the call over to Mr. Shiwani Karwat from Orient Capital. Thank you, and over to you, ma'am.

[Shiwani Karwat, analyst]

Good morning, everyone. Welcome to the Q2 and H1 FY '25 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. Ram Charan SR, CFO; and Mr. Anish Sawlani, Head of Investor Relations. .

Before we proceed to start the call, I would like to give a small disclaimer that this conference call may contain forward-looking statements about the company, which are based on 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 exchange. 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]

Thanks, Shiwani. Good morning, and thank you very much. A good morning to all the participants. So I appreciate it like always, all of you making time to join the earnings call of CAMS. I trust that I'm audible and that you've been able to download the presentation and have a copy of it, because we'll continue to reference to that and refer to the individual chart numbers.

But broadly, as you would have seen in the press release and the other releases yesterday, we had a fabulous quarter. There were a number of reasons what led to that happening. And I'll take it to those. But historically, perhaps our best quarter ever. Across metrics. Across metrics of asset growth in MF, revenue growth in MF, revenue growth in non-MF.

And overall success in the marketplace in acquired business and expanding the installed base. And then from a margin profile perspective, again, we have been a very strong story. I am on Chart #8, and we'll take you through some of the key highlights.

Overall, at company level, enterprise level, revenue grew 32.7%. MF was slightly ahead of non-MF. You know that it's been our endeavor to scale non-MF faster, but MF grew 32.9%. Non-MF by itself, just short of 32%, I think, is a very credible number because early 30s, early to mid-30s is the number we've been reporting now for a few quarters.

There are foundational aspects this number scale up. And also, there was a time when this was a small base number not above. It's a relatively large base number, so very happy to continue sharing with you the revenue growth profile in non-MF at short of 32%.

Share of non-MF revenue, which was hovered about 13%, was 12.9% of overall revenue. I think a good cause why did not expand because MF expanded just ahead of everything else. Absolute EBITDA. And you know that in these results, this is our standard policy of recognizing revenue. There are no lumps. There are no onetime payouts by clients. They're not of those. It's exactly the way we've been reporting revenue for the last many years.

Based of that, EBITDA -- absolute EBITDA almost 40%. In the percentage, grew 240 points up on an annual basis, grew share about 46.9%, I think, very hardening. We've said in the past that it's our endeavor to go this margin number about 1% a year, but at 2.4%, that's a great success.

And absolute PAT grew 44.9%. PAT percentage at 32.4% was 270 basis points up. So EBITDA percentage to 40 basis points up. PAT percentage up to 70 basis points. And historically, I can't remember a quarter when all these numbers line of straight to tell a story like what I'm telling you right now. Based on all of this, I'm very happy to share with you that the CAMS Board has approved an interim dividend of INR 25. INR 25 is essentially 2 components. INR 14.5 is what traditionally we would have paid for a 65% payout policy. But just given the fact that we've had a strong run from an earnings perspective, we did believe and the Board did believe that it was time to kind of signal the market that we want to reward them out.

So the balance INR 10.5 is part of what we call a special interim dividend, which obviously, from a record perspective, the 65% is the policy we will be staying through to INR 10.5 is special. So INR 14.5 and INR 10.5 add up to INR 25, and that's the dividend that has been approved and declared as of yesterday.

I'll move to the next. I move to Chart #7. Just key highlights, and I'm sure all of you have crossed this quite well. But in aggregate, at just close to INR 45 lakh crore or INR 45 trillion AUM. This is the fastest quarterly growth. We added almost INR 5 lakh crores in a quarter.

Now traditionally, you've known that, that almost like a year's increase. There are years when I felt happy about growing AUM by INR 5 lakh crore to INR 6 lakh crore in a year. This time it happened in a quarter because I high. And of course, that's linked to the state of the market, great for us.

Equity assets, and this is active equity, which kind of defines the P&L because it's almost upwards of 60% of overall MF revenue contribution, grew almost 60%. So equity assets grew almost 59.4%, much ahead of the rest of the industry, 53.5%. This then defined share gain in equity AUM, obviously, it would. So equity AUM is up about 100 basis points up to about 66%. That's a very relevant metric. Of course, any asset growth is on metric, but equities decidedly so because of the core of the retail markets and its core of the revenue base for the MF business.

Net sales, which have been kind of creeping up in the industry at onetime. Net sales used to accrue largely from SIP monthly collections this time CAMS has got a number of over INR 1 lakh crore, industry about INR 1.5 lakh crores, so we are 66% of industry net sales, and I think that's just a very good much-retail participation continuing to enhance.

New fund offerings, which have now become a good kind of go-to-market theme for the domestic mutual funds, CAMS grew new fund portfolio was about INR 47,000 crores industry was about 45. There was a slew of large sectoral fund launches. And I think some of the benefit of these does show up in other parts of the business, especially in payments and KRA because a lot of these are new to the MF industry investors, who walk in through the MF route. And then when they're onboarded, we get enough on the KRA PAN accretion and revenue and also on the payment side, especially if some of these people coming through NFOs and the SIPs.

RevPAR high SIP registration. Again, a fantastic metric, which is about the middle and bottom of the pyramid, just buying into this theme, which I think is what all of you know and continue to believe in, is the theme for the times to come as as MF and SIP has become more and more retail products. INR 1.2 crores new SIPs were registered during the quarter. In 1 month ago, 45 lakh, we are bracing ourselves shortly for that number to get to 40 lakhs in some months. About INR 1.2 crores, again, just to remind you 3 years back, this used to be another number became quarterly number now.

And again, given the fact that a sites are kind of asset accruing for almost a lifetime -- a large part of them, some will are right, but as we stay for lifetime was a very, very solid traditional metric. SIP collections, you've been reading, we were up 54% year-on-year compared to 48% for the rest of the industry. So I think each one of these -- the reason I continue to be calling them foundational metrics versus what happened in the quarter.

But none of this is about a quarter, what will happen only in a quarter and then varnish. These are stable, almost lifetime flows of assets lifetime foundational revenue creates for the. Beyond mutual funds on the alternatives came back. We reported some falloffs last quarter if you're running a business, which is almost 11.25, you will have some follow-up. I think this time, 21% year-on-year revenue growth has the highest number of quarterly wins, 57 new mandates. So this covers everything that we do, includes wealth serve, includes deficits and and includes the --

You would have also raised that about 2 weeks back, we can have that we opened the second office in and again, you will realize we are putting our money where our mouth is. So we opened the process. We had a small office. We now have almost 50 seaters, very good inauguration and it's a good signaling to the market that we are serious about this.

We're putting our money mouths, filling it up with both infrastructure and people. On the KRA side, I think the good work done by the team continues to unfold. You will recollect that last year, we had sequentially on an annual basis reported just short of 100% revenue growth. So FY '24 over FY '23, was about a 95% plus revenue growth. Now when you expanded a base and that's the reason I said that these are not small-based stories.

You see a 56% year-on-year quarterly growth, which I think is, again, one, it is a indication of what's happening in the core market MFs where individual investors are buying the single MFs, but they go to the second and the third and the fourth. And the second is that all the new sales we had done, the new lower sales, which obviously hasn't happened too much in MF because we've already sold to everyone, who is eligible. So this is largely on the fintech, broking demat side. You see that we added about 26 new fintechs, platforms and those kind of companies to the client cluster, significantly adding non-MF pans to the overall stock, which is very heartening because that's a true diversification of revenue and client talent then helps us in other ways as we do and sell other services apart from KRA to the same client.

On a similar theme, I think is a fantastic foundational story from a CAMSPay perspective. Revenue of 69%. You know this is on the back of about late 20s growth last year, but CAMSPay is seeing adoption similar story to the KRA. The base is buying more and more. I think the base growth story is led by SIP, but is also led by recurring payments and housing finance, insurance and other recurring payments avenues.

And then you know that, in general, a digital payment story is expanding. We have now some revenue getting reported by the education segment levels, but we are taking on a more aggressive view for FY '26. And of course, you get out of the country as to kind of lead the charge because it is almost becoming the separate way to pay for recurring payments, especially in our backyard SIPs. Bima Central unique user base has grown over to 15 lakh of 50,000. Small milestone but notable milestone, which is that we process 1 lakh service transactions, which is people coming and doing the renewal kind of amounts or doing an address change through Bima Central. Of course, we have to -- this number has to be to be meaningful, but we always make a start in life. And I think this 1 lakh it is a very nice milestone. So remember that there are only 2 or 3 insurers in ticket right now. That part has to expand quite a bit. But I'll expand very hopeful to scale this number to several next times. Over I think heartening to me and to ask is the fact that we have doubled, and this is a number I spoke about last quarter. But we used to have, you will remember, 5 lakh new policies accruing to insurers every quarter. That was a baseline for about -- all of FY '24. FY '25 1Q, we crossed 10 lakhs, which was 1 million in the first quarter, 9.8 lakhs close to another 1 million in the second quarter.

Hopefully, we will keep this and make it a baseline, which means you will continue seeing not 5 or 6 lakh, but maybe 11 lakh conversions every quarter. So this is the base for the company or for the businesses as we get in more more and more individuals into insurance.

We get the conversion and the maintenance fees, we then come come on to Bima Central, pay their premiums to renewals, will have the claim. So it's the basic core formative block and that can behave very well. Record aggregator, we can 16.5% market share. So year-on-year large growth quarter-on-quarter almost flat. But again, I think we're very happy with the way the business is progressing.

NPS, around 2.5x of year-on-year growth. I will show you some of the numbers across 1 lakh subscribers. We've held the position of #2 in EPS. And then you would have read this that we formally -- this was due for some time. We've formally approved and are in the process of capitalizing forming this JV should happen soon. We have settled JV along the other. And this platform is then a scope to kind of expand and do a lot many more things than what it has done so far.

It opens up much broader playing field for the property to scale. So that's in summary, just given the time we have, I will brief you through some of the other stuff transaction volumes, I'm on Chart #8. I don't want to draw you into a lot of details. So listen, I say that the company has grown all this revenue growth that you're seeing has happened on the back of almost 60% transaction growth, 60% transaction growth, whether you're selling cars or registering SIPs, et cetera triggering payments are never easy.

And you've seen the exemplary level of control and compliance and everything else that the team has been able to deliver based on these numbers. I just wanted to kind of just speak about that a little unique plans. These are unique investors coming into the industry and into CAMS, 31% up again ahead of the industry. And the reason, again, I'm telling you this is formative and foundational because the same people who come in months, we'll do the next transaction and the next and the next continue to expanding. So that's foundation.

SIP collect shields obviously grew very well, 54% up compared to 48% for rest of the industry. Equity AUM grew 59%. Equity net sales grew above 90%, just touching about 1 lakh core, newer SIP registrations saw a 30% growth overall on a year-on-year basis. Sorry, on a first quarter to second quarter basis, let's move forward.

You said the I'm on Chart #9. So I will not spend too much time quarterly AU market share, about 68%. Equity assets have grown faster than the industry that you've seen over the next.

I'll quickly take you maybe a made on the individual businesses on Chart #11, we spoke about alternatives good growth at earning 21% revenue growth on the back of healthy signings, 57-year signings. I think the thing I just want to call out is that we were kind of the pioneers in digitization starting '21. During COVID, the well-served 360 platform, 165 sign-up. Number is close to INR 175 now as we're progressing in the quarter, but 165 at the end of the quarter. A large quantum of our intake is becoming efficient, not just for CAMS, but for AIF and PMS. Their interaction with their customers are becoming more efficient because it's all being done digitally. If someone in Delhi has their customer in Moradabad, you don't have to really go there. You can do all of this digitally. So it's changing the face of the industry and also making it a lot more productive and a lot more digitized. Was giddy, 20-plus clients, second office, the 50-seater having been opened. And then Fintupul, which has had strong success with the custodial operations and bringing in automation on the custody side for custodies to integrate with PMS and later with AIs to onboard their customers has now built out and is launching its NPS product.

It's an NPS POP automation and onboarding product, which integrates all the 3 CRAs. Also, you go with a platform, which integrates the strength of key documentation esigning, estamping, can create electronic workflows and then you can take this either through a standard integration or -- So try to move into adjacent markets, which offer opportunity. I think I'm very pleased with the way the team has kind of topped this out and is implementing these things in the market, both from CAMS AIF perspective on the printable perspective.

I'll move to Chart #12 on CAMS KRA. I spoke about the upward trajectory of 56% year-on-year revenue growth, the 26 new fintech non-MF additions, that point I want to disclose. I think it's a very strong combination. Think360 is the front. That's a fantastic KYC solution, very slick and then the KRAs seamless onboarding journey.

All of that is great news. I spoke about the GFF launch of Nexus, which is a KRA dashboard and the work KYC which we are now bringing out in the market, which will further the interactive flow of new capital markets consumer is turning up and doing a new KYC, whichever entity they're signing up with, the entire flow can happen on move forward.

On, give you the highlights, about 7.5 million in aggregating insurance accounts. About 9 to 4 lakh epolicies out of which just this quarter 10 lakh came in the last quarter, 40% market share. Now have sizeable and as the 2 integrated insurers and Bima Central, 2 more insurers. We should be able to report, I think, maybe sometime by mid to late November. And you know that as each of them come in, they then strongly start promoting Bima Central and that then becomes a preferred way for customers to interact with their insurers. 47 out of the 55 life sales insurers. And this will just say about the breadth of acceptance. They are the best metric that I think can be a lot better than where we are at 1 million policies in a quarter.

We could be a 2 million, 3 million. But from a breadth perspective, 47 out of 55 insurers unless regularly contributing epolicies on Bima Central. So Bima Central also was awarded by, recognized for best use technology in the insurance industry.

I'll flip to the next, spoke about payments revenue up 69% year-on-year. UPI autopay and some of this is being also used for small ticket SIPs, et cetera, 100%, a significant amount of product enhancement occurring 23 new logos in 2Q. I wanted to mention LIC. You will remember that LIC was empaneled for our services. We had announced this in fact March around that time, Jan, Feb, March those services are on live. Deliveries commenced even for payment gateway devices and I say now in final CAMS stay, which is a good starting sign of for a large to be wanted to work with us. I think that could turn to a large client account for us over a period of time.

From a perspective, I spoke about 16.5% market share holding Q-on-Q. 46% last year for significant growth, about again, small numbers, but about 170% year-on-year revenue growth. There's 1 small numbers, so we're waiting for them to scale a little more, I think, by the fourth quarter, these numbers should be much larger from an absolute revenue perspective.

I think the analytics part of the entire stack, which is the CAMS platform both bank statement analyzer and the first for finance management is now finding enough traction. We're just crossing about a 10 lakhs in a month. Of course, the numbers can be 10x of that number, but we've crossed 1 lakhs that's a good metric, a good starting metric to have, and we're expecting we should see multiple legs of scale up within the year.

On, I will a mandate from LTFS and from stable money. So we will see happening by December, January. I spoke about Amaze, both the PSM and the banks statement analyzer both are run by the team continue to see expansion. The entire too that I spoke about, the platform that they are building, the onboarding and video KYC parts will be with things so that from a synergy perspective, continues to expand and do well. Go to the next. And then NPS, I spoke about an underscored us crossing overall 1 lakh CI accounts. They were largely retail and private sector employer led. We haven't yet cracked much in government, bringing in a variety of POPs on the platform, I think Indian banks starting off with us is good news. But we continue -- although it's a long haul business. We continue to focus on this and focus on scaling it. Next. Okay. So this is what I had. I hope this is useful. I am now handing over to Ram Charan, who will take you through the financials. You should have about 25 minutes for Q&A after that.

[Sesha Ramcharan, executive]

Thank you, Anuj. Anuj just covered the salient points of the financials in the first slide. So I will just take 5 minutes for 1 level of detail. As you would have noted, AUM had a very hard growth of 37% during the current quarter, we ended INR 45.27 crores. On the back of it, the overall revenue grew 33%, almost 32.7% ended the quarter, INR 365 crores and the mutual fund revenue also grew around 33% at INR 318 crores. So overall INR 365 crores consisted of MF revenue of INR 318 crores and non-MF revenue of INR 47 crores. The good part of this growth has been uniform across all segments. From an MF perspective, and even with non-MF, you had the asset-based revenue grew at around 32.7% and non-asset-based revenue grew at 34%. The asset-based rev tracked as the growth in AUM. We've seen a quarter of stable yields. We generally say that the growth of AUM is around 75%. At this time, you had the AUM to see proportion to be around 84%. So deals are largely stable back of growth in equity, mutul fund, the mix is favorable. And also happy to say that we come from the discussion that we have computed with some large customers are well within expectations in terms of what the yield will be.

So overall, we see stable yields. We see good growth from asset based and a non-asset-based revenue. The non-asset-based revenue was driven largely by increase in transaction revenue, a big increase in transactions, both digital as well as paper and also Bima Central is a part of this and also some increase in NFO revenue as well as call center revenue. So that's contributed to a increase in the non-asset-based revenue on a year-on-year basis 34%. Noninterest revenue. Again, we went into details and Anuj went over the details of each and every business.

Just to add that we had AIF coming back to a good growth trajectory into 21% year-on-year, the 7% quarter-on-quarter. Similarly, payments have done very well in terms of revenue growth, 69% growth year-on-year and 15% quarter-on-quarter. And KRA has also continued its strong performance with a 56% growth year-on-year and 18% quarter-on-quarter. So overall, 3, 4 businesses are firing very well in the non-investment and the growth is 31.9% year-on-year and 7% quarter-on-quarter.

On the profit perspective, we've had a very, very strong EBITDA quarter. One of the margin you've seen in the recent past at 46.9%, INR 171 crores. This is 140 we're seeing on a sequential basis. So very strong performance from a margin perspective. PBT, again, is INR 163 crores, 43.4% and PAT was very strong at INR 122 crores for the quarter at 32.4 percentage. So almost 270 bps on a year-on-year basis and about 100 bps quarter-on-quarter.

The costs have been largely on expected lines. The employee cost grew around 20% on a year-on-year basis and driven mainly by some hiring. Obviously, hiring has not been in proportion to the increase in transactions or complexity has been a little muted when compared to the growth. Overall, there has been some increase in pay for the employees. So the employee cost however remains very well within target with 32% of overall revenue.

Operating expenses, again, well within expected lines. Some increases we have seen in OP is again a billing items. So it will not affect the bottom line as such. Some increases because of transaction in SMS costs and cloud has been -- because all our new businesses run on cloud, there has been some increase in the cloud cost.

The other expenses are fee expenses. We did see some onetime expenses this time, because of activities like the MFCentral in corporation or data privacy preparation that we are doing given the ramifications that is for the entire industry. So there's some one-off professional charges in this for a couple of crores, but otherwise largely in line.

The only exception that we going forward is yesterday, there was a grant of equity of options, the ESOPs that went to employees. So going forward, post, there will be some increase that you will see on the ESOP cost incremental cost for the year could be around a little more than INR 4 crores. And next year, you could have some incremental cost because of that.

Barring that, we see usual hiring costs, I mean, we've already invested a lot on talent. You've got top tech colleges people coming and making a difference on the ground over the last couple of quarters. So costs should be broadly stable. The variable cost will increase in line with revenue, which is the bank charges that we pay for the payments or the cloud cost that we incurred for the new business or the data entry charges that we are for physical transactions.

Those will increase in line with the revenue. The other expenses and employee costs should remain broadly stable. So that was a short commentary I wanted to give on the profit and the cost. And as you would have noted, the Board was -- the Board has granted a special dividend of INR 10.5 and overall dividend INR 25 per share. Before that, the cash and cash equivalent as on balance sheet was very healthy at INR 732 crores as of 30th of September.

So I will now pause and hand over back to the moderator and open it up for any questions.

[Operator]

[Operator Instructions]

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

[Prayesh Jain, analyst]

Congrats on a good set of numbers. Sir, just a few questions from my side. Firstly, on the MF side, we've heard AMC is talking about rationalization of commission structures. And basically, that is to kind of protect the yields falling further materially because of the telescopic structure. So this is more of a fundamental long-term question. Do you think that the industry is moving towards that should also be kind of protected at the current levels?

Or how should we think about this because I think that would be one of the key things to be part of from a medium-term perspective? Second question was on CAMSPay. If you could split up your business into, say, and that would be helpful. Third would be on Think360, if we see revenue decline in this quarter. Could you highlight the reasons for the same? And lastly, just a feedback, if you could give some profitability numbers across the key segments at the EBITDA level, that would be a great help for us.

[Anuj Kumar, executive]

Sure. Thanks, Prayesh. So I'll try to take your questions in sequence. On the yield profile, I think you have the history of the company now for almost a decade, for almost history for a decade. And my estimate would be that yield behavior is not radically going to change because we are not expecting any other radical event to happen.

Our delivery continues to become immensely complex, as you know, with process, regulation, risk management, et cetera, going up and continue to sell at slightly cheaper rates because of the telescopic pricing in successive years. As a result of that, whichever metric you look at, whether you look at the portfolio price, which is at the right price, it's not the price.

But if you look at the portfolio price of cost, if you look at the per transaction cost, in absolute rupee terms, they are diminishing and they don't diminish anywhere else in the world or in any other form of procurement that any of our clients does. So I think the telescoping impact will continue more or less in line with what we've seen happen over the last decade, et cetera.

Of course, everybody wants to buy it cheap, but it's not that anybody is trying to buy from us. So we are not expecting any radical shift in this profile from now onwards. Your second question was on CAMSPay. Think of CAMSPay as about a little over 50% of the business accruing from mutual funds. So between 55 to 60. And the balanced business is non-MF business. In MF, you can assume that most of this is about SIPs. SIPs have grown significantly, I've seen in the last year. So the business does get some fill-up from that, which was looking to happen.

So that was your question on trying to split the activity and revenue levels. I'm not giving you an exact revenue number because prices may be different. But in essence, you can think of about 55% around that to be MF contribution and the rest is non-MF to the overall CAMSPay book.

[Sesha Ramcharan, executive]

Yes. Prayesh, on the question on your question on the breakup of non-MF margins, so we've actually said that it has been cleaned up over the last few quarters. And this trend continues in the current quarter. We have a non-MF margins. We said it was around 15%, so it's gone up to closer to 19% this time. Obviously, on the back of good growth on pay and carry. So this is again on a higher trend. We listen to your feedback on publishing these numbers, we'll have a look at it and probably next quarter, we'll have kind of.

[Prayesh Jain, analyst]

Think360, could you mention as to what was the revenue growth in this quarter?

[Anuj Kumar, executive]

Yes, absolutely. So Think360, as you know, the quick ID part has been the growing part, which is video KYC. The Algo360 0 part where I shared that we won new products with LTFS and StepMoney. Part of that you're seeing some cannibalization from account aggregator. Our view was that account aggregator will cannibalize some of that, but we have to the entire amaze part, which is the PSPs in think, thinking that the ports and pace will almost be the same, but it looks like revenue down has not been made up in that close space. So think of account aggregator taking away some share from Algo360, and we're making up to AA analytics, but that makeup is not completely that much. And then there were some U.S. analytics contracts, which they have done on a 6-month, 1 year, 1.5 year basis, they're not annuity contracts, they come to an end and some of those 1 or 2 of those have come to an end. So that really adds up. But we are expecting that revenue from here should show growth.

[Operator]

The next question is from the line of Supratim Datta from AMBIT Capital.

[Supratim Dutta, analyst]

So I'll start off first on the MF side, just looking at the trends over the last 2 weeks that you has come off. So is there a mechanism built into the pricing wherein if the AUM decline or deals go up? Is that amount also broken to the pricing model? That is the one I wanted to understand. Two is, if I see on the account aggregator side, RBI is launching and unified lending interface, which is similar to an account aggregator platform, but backed by the regulator. So how do you see that impacting the account aggregator industry and our business?

And the third question is on the expenses front, there has been a significant pickup in the other expenses. I do understand that you have explained that some of this is linked to transactions and going up. But just wanted to understand what proportion of this would be variable increase that is due to flows versus what is permanent. If you could give us some sense around that, that would be very helpful.

[Anuj Kumar, executive]

Sure. So the first part of your question was that you've seen equity assets come down in the last 15 days, which is true. There has been an asset down over the last 2, 3 weeks. Does that impact pricing and do prices go up and assets go down? The answer is yes. Think of it like anything else that we buy in bulk. If you're paying INR 10 for 10 units, but you're paying only INR 14 for 15 units. When you go back to 10, you're paying INR 10 for 10. And when you come up again to 15, you're paying INR 14 or something. So it is back telescopic, which means when assets fall the previous higher rates play out. Do we have to negotiate for them? Are they hardcoded in the price? They are hardcoded in the contracts, so we don't have to negotiate. Think of any slab-based pricing that you have seen on life, it is exactly like that.

You buy so much and you get this price, but you go buy only 90% of that, your price goes up. So that's an automatic adjustment that happens in the invoicing. We haven't said this too many times, but during the 1 year of COVID, all through calendar 2020, this happened to us. So that's the answer to your first question.

On the unified lending interface, will that start impacting as a model and us as a company? You have read everything in the press. And obviously, there are details. Obviously, there are common areas. We are also watching the space very closely. But yes, for me to say that it will not have any impact that is ruled out, will not right. We are observing it carefully. If the regulatory platform starts doing exactly what commercials are doing, then obviously the impact will be there. There's no question about it. But I suggest we just watch it and see how it emerges over a period of time. That's on #2. On expenses, I'll just ask Ram answer

[Sesha Ramcharan, executive]

Yes. So I think your question was more on the non-salary expenses and variable. So I'll just put it two if you see there is an operating expenses that we incur, which is more variable in nature. So traditionally, if you take away the out-of-park expenses or the reimbursed expenses, that is around 8% to 8.5% of the overall revenue.

And that has been the -- our experience and trend over the last few years. So we don't see that changing a lot, especially given that we are into cloud for the new businesses and which are ramping up and the bank charges that we need to pay for the ECS and the UPI autopay stuff. So that kind of relationship continues to hold, and we don't see any reason why that will break in the future, which is operating expenses being around 8% to 8.5% of revenue.

The other expenses is a fixed cost. And I think over the last few quarters, we've been around INR 25 crores to INR 28 crores of absolute numbers during a quarter, which was 21 22 in the last quarter. So you will continue to see inflation-led expenses, the AMCs that we continue to pay, the rent and leases that we continue to incur.

Last time, as I was mentioning, there is some one-off expenses for a couple of crores in these INR 38 crores that we have. But again, some of the expenses have a habit of repeating as a dependent on our expense in different quarters. So I wouldn't read too much into it, except that we are stabilizing around INR 25 crores to INR 30 crores of other expenses and 8% of operating expenses.

[Operator]

The next question is from the line of Uday from Investec.

[Unknown Analyst]

Most of my questions have been answered. Just one thing. You mentioned that the new JV with regards to MFCentral would open up some opportunity new areas that can be explored. Can you put some light on that?

[Anuj Kumar, executive]

Yes, sure. So as you know, this was envisioned as industrial platform for easing out issues of investor connects, servicing, transaction origination, all of those things for MF industry, MF investors at an industry level was launched in 2021, has ran the last about 2.5 to 3 years in that format, where anyone who wants to use the APIs or who wants to connect with a set as an enterprise, would come and do individual contracts with KFN and CAMS. Although they would deal with the platform, the platform does not have an entity and organization and our structure, capital of its own to think of promoting or marketing itself or really building very large game-changing assets of.

Today, the servicing and the revenue base is essentially of 2 types. If you as an individual investors, come to a MFCentral, then you can transact. If you come through APIs, which are given to other platforms, you can take a cash, you will do nonfinancial transactions. But financial transactions haven't really built themselves out in a meaningful way, other utilities like mutual funds, which are other revenue possibilities are also in the launch stage, but haven't really hit the market.

When we create the entity, we'll take a few more weeks, I think with an independent organization, its own capital, very, very focused market-facing decision-making on sales force. The ability of the JV to work with the market on especially the things that I've said, which is financial transactions, loan against mutual funds and other emerging areas that may come up. I think that ability will get enhanced and will be much more sharper.

So we are expecting that to be generally growth accretive for the JV, but also a lot better and, I would say, a wider frame service to the industry because that is the effective of the platform.

[Unknown Analyst]

Okay. Sure, sir. Just another question with regards to this. How much would -- is there any revenue from mutual fund MFCentral that we are booking into our books? Or is it just right now servicing how is it right now?

[Sesha Ramcharan, executive]

So currently, the model is more kind of API based. So we have consolidated account statements or capital gain statements and nonfinancial transactions APIs, which are consumed by some intermediaries. Yes, we are booking revenue in our expected books. In the current quarter, revenue will be around INR 1.7 crores of -- it's 50 revenue split between the 2 RPAs. So the revenue is just in the books going forward once the JV is incorporated, this will be handled by the JV company as a 50-50 joint venture.

[Operator]

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

[Lalit Deo, analyst]

Congratulations on a good set of numbers. Sir, just on this non-MF business, like within CAMSPay and CAMS, could you give us the unit economics of this business like on per transaction level, what kind of yields are we making in these segments?

[Anuj Kumar, executive]

So your question was on CAMS KRA act.

[Lalit Deo, analyst]

CAMSPay.

[Sesha Ramcharan, executive]

Okay. So well, there's no uniform basis CAMSPay, and I can't obviously give you exact numbers, but I can tell you how this works. From a CAMSPay perspective, you have an ACH mode of transaction where we charge for a mandate registration and then we charge for per transaction processing, out of which we have to pay some money to the sponsor bank for us to access the MPCA backbone. So that's how it works on per transaction basis and a mandate registration. The mandate registration could be INR 5, INR 4, depending on whatever the commercial arrangement we have. On per transaction basis could be INR 3, INR 2, INR 5, depending on what are the volumes and the arrangement we have, right?

That is from a CAMS ACH perspective. We have UPI auto pay. UPI auto pay, the commercial models are very different. Some have a transaction based. A few have a value-based billing also. So it's very difficult to get into a transaction mode. But broadly, this transaction-based billing and mandate registration that happens. So the base is the same. Only thing is there is a variation on the value-based billing for some of the UPI customers, UPI auto pay customers. So that's the -- how the unit economics works largely platform-based where we have to pay some change to the bank for processing the transaction, and then we get paid for putting for every time -- put one of these transactions, doing the reconciliation and crediting the amounts from a CAMSPay perspective. CAMSPay, there are 3 broad pieces of the revenue model. Number one is when you can upload, which is basically a new person comes and uses either at least eauthentication or a physical form, it is KRA or KYC done, and the PAN actually, which is identifier a recite in the CAMS care is got an upload. We get paid for the upload by the AMC. And then there is this download, which is that if the person goes to another, say, in mutual fund and then he wants to open a photo. Based on that download that happens, they don't have to do the KYC again. So that is, call it, download revenue. And third is print facility, which is -- it goes -- comes through another KRA, into CAMS KRA and accesses KRA information, then we get very interoperability charges. So there are 3 basic unit economics, again, a platform-based business. Once we kind of put it into our platform every time that PAN is withdrawn or downloaded for some other investment, we get paid by the asset manager. So that's how the model works.

[Lalit Deo, analyst]

Sure, sir. And sir, similar to like what you mentioned for CAMSPay like about 55% to 60% comes from the mutual fund business. Now in the KYC business, as you understand that we are also adding on new financial institutions, like we are significantly expanding into the non-MF business as well over there. So could you give us some color like what is the revenue coming from the non-MF side of it?

[Sesha Ramcharan, executive]

Yes. Yes. I think what used to be close to 0 has now reached around 20 percentage. So 80% will be MF customers and 20% will be on non-asset management companies and on an increasing trend.

[Lalit Deo, analyst]

Sure, sir. And sir, like this old segment, the KRA business has been expanding has shown some strong growth over the last 18 to 24 months. And now we are hearing that from our peers that they are also trying to enter into this space. So any comments around that things like how should we see the overall industry is going from here on?

[Anuj Kumar, executive]

All I can say is that we are happy to inspire others. So the rest, of course, it's a good business to do. So I will not specifically comment on how they are thinking about it, but the industry is on an expansion trend. And onboarding, indication, will always have a strong goal to play in regulated markets. We also remember that while we do the KRA business inside CAMS KRA, there is a large piece of the front end, which is a KYC part, video KYC, which we do for some of the largest banks in the country, including Central Bank, Bank of Baroda, Canada and RBI, you're sitting inside thing.

It's a large portfolio for us. And I'm sure others are not saying what we are doing. And thank you of being.

[Operator]

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

[Abhijeet Sakhare, analyst]

I have one question on costs. How do we think about the flexibility in costs, especially as we get into more uncertain growth environment. I'm sure some of it is linked to how the business grows, but some of might be literally more sticky commitments going into next 12 months. So some guidance there will be really helpful?

[Sesha Ramcharan, executive]

So Abhijeet, again, this is -- I think we are conscious of the fact that there has to be some flexibility on the cost, but there are limitations to the model. So what we always do is we don't obviously go over more in terms of recruiting for -- in terms of recruitment costs, or hiring more people for that. We lay in automation as you know, that some amount of variability is there when we move to the cloud cost also for the new businesses.

See, the flexibility in cost exists because -- on 2 accounts. One is obviously, the flexible cost is the data entry and the people who clean the data, which is variable depending on the number of transactions that we get, which is -- with the lag, there is some optimization possible, and we have done it in the past too, even know that in the peak of COVID, our margins never dropped below 30% when everybody was floundering to keep it ahead up of water, right?

Even in that situation, our margins never went below 30%, right? I'm saying that is the extreme kind of scenario that you're thinking of. So with the lag, we have some flexibility on some part of the variable cost. As I said, around 8% of my cost is variable currently, and we have some flexibility in most of those components. Barring that, I don't think that we are worsening. What we are trying is to continue to focus on automation, continue to focus on enhancing the platform capabilities to handle for some, the SIP transaction that you are seeing, it's not all spent for every trigger that we do, right? It's an automatic process. Almost like end-to-end automation, that's an SIP process, which is where we put all the cross of transactions without incurring additional costs. So individual parts, the businesses are continuing to be automated. We are conscious of the fact that at some point of time, cost aspect is be extremely -- it will be very important to meet in the margins, and we have never lost sight of that fact. So we continue to have some 8% variable cost, which you can optimize, continue to automate in terms of platform. And we are sure that when CAMS will be able to be flexible enough to retain the margin times.

[Abhijeet Sakhare, analyst]

And what would be the margin range you would want to maintain?

[Sesha Ramcharan, executive]

So we want to be very aggressive on margin targets. We've never been and you know that. So we have kind of come to 46.9, and we'll have to see it obviously determined by how much assets grow in the future. But if current trend, I would assume that to get to end of year get to more than 47, 47.5 is something that is well within reach to go beyond 48, I think will be difficult given the pulls and pressures of other items like investment and cost and all that stuff. But if things do continue getting to a less than 48% margin is something that is doable within this year. Definitely, 47.5 is doabble in our mind.

[Operator]

The next question is from the line of Devesh from IIFL Securities.

[Devesh Agarwal, analyst]

Sir, just 1 question. If we see the yield decline on a sequential basis, it has been much less in a core business compared to the AUM growth. Now obviously, there has been improvement in the AUM mix and that is leading to this cushion in the yield fall. A couple of things that I wanted to understand. One, as the AUM grows, does the decline in the yield is linear or for the AMCs which have crossed a certain threshold, the decline in the yield would be lower, is that the case? And secondly, what should be the basically a rule of thumb that we should follow in terms of going ahead, if there is a growth in the AUM, how much yield moderation should one build in, say, FY '26 or '25?

[Sesha Ramcharan, executive]

So Devesh, yes, I think this is an observation that I also made in the beginning saying that the yields have largely been stable. And to be honest, this is not totally unexpected. I think when we went through this large deal, we said in the last year, we continue to kind of have a stand that you will see this one-off drop-off, but over a period of 1 year, they will stabilize. And the last couple of quarters, we have seen this stable. As you -- I know the thumb role that we use is that the asset-to-asset fee growth is around 75% is what we see. It's been around 83% this quarter. But I will continue to urge you to use the same thumb rule of 75%, right?

Because while we have completed the discussions and closed deals with a large -- a lot of the major funds, this is an ongoing exercise, right? We will have a couple coming up within the next year and a couple after that. So I would continue to say thumb rule of 75% growth should all good, and there will be quarters where we will do. And there will be probably a few quarters that we won't. But on average, this should hold good. You could actually expect as to suppress in a few quarters, but I think that's something that we have to live with. Apart from that, we don't see any major developments on yield. The -- as we grow, I don't think the relationship is going to change drastically because, yes, a lot of the AMCs have reached the highest slab in terms of when the rates will go down. For example, it could be INR 1 lakh crores of equity, which means a lot of AMCs would have reached that stage INR 50,000 crores. So going forward, we have reached the stage where additional slabs are not there, but that doesn't preclude them from inputting it in the future, too.

So I don't want to change the assumptions or the basis in which you are estimating. I think that will remain true for the next few quarters also in the next year also for that matter.

[Devesh Agarwal, analyst]

And sir, at the asset level, if you can give us some sense on a blended, we are not able to get the right picture of the decline in the yield. But if you talk about pure equity, what was the decline in the yield in this quarter?

[Sesha Ramcharan, executive]

Okay. It's broadly in line. So on a quarter-on-quarter basis, the equity yield hovered around 3.4 to 3.5 percentage. And the overall decline on equity decline -- equity decline was almost broadly on the same lines.

[Operator]

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

[Dipanjan Ghosh, analyst]

I've got a few questions from my side. First, in the CAMSPay business, you mentioned that today most around 55 to 64 is from the MF side and rest from non-MF. So if you can give a similar number for, let's say, the first half of last fiscal, so that will be great. Second, on the alternate business, it seems that there have been some yield pickup over the last maybe 3 or 4 quarters including this presenter. A similar trend to what we are seeing in case of some of your competitors also. So wanted to some sense of is it like more value-added services being provided to the alternate for more schemes coming in from these alternate or new plant additions. If you can give some color on that? And lastly, on the KRA business, again, you mentioned that non-MF is not 20% from almost 0% few quarters back. So would it be a fair assumption that the MF piece of the KRA business is going at 32...

[Anuj Kumar, executive]

Sure. Sure. So let me at the second part of your question first. On AIF, you're right that it's become a lot more competitive. Over the time, 6 or 7 years back when CAMS was the only port of call when new people launch to the AIF or CAMS is then became a little more competitive from a domestic perspective. Today, you have overseas providers selling in the same market. And whenever an industry becomes competitive, you will see a bit of price down. You see very broad market you go to, so this is no different.

However, we're mitigating it, of course, things like natural mitigant where unit economics will be better. And then things like well served, which is digital onboarding. There's essentially built like it's a digital stack, which means that you don't deploy it also legal, processing force or accountant. So any of those people to do the work. That work is done by the platform. So like we said, we were the first to enter that. We've scaled it significantly. Because a lot of money raised still happens in the physical format, but we are very confident that this -- with the 25-plus set of buyers. This will -- the time will accentuate and a lot of money raising bill will start happening digitally.

So those kind of mitigants in terms of selling a richer digital stack charging for APIs, building out websites, well platforms, all of that is an attribute to doing a business where there is some amount of labor and especially for accounting factors, et cetera. So that's the time we are doing it. You would have a question on the revenue mix of CAMSPay a year back, I would still think that think of the business is about 55% to 60% skewed in favor of MF. I don't think a large change has happened in the recent year. Of course, SIP momentum has gone up, it is showing up with the overall volumes. But like I said, we have now begun selling to education, and we will deepen that segment in the coming year. So you will see this number to be stable around that part. You would have a question on KRA. The KRA is MF business is growing 30% to 40%. I think, yes, it's fair to assume it's growing 30% to 40%. One good surrogate metric you can catch on to is the 31% MF new PAN that we spoke about because that's a tangible PAN when it comes in, the first time. And of course, everything else is in that time stays at has downloaded multiple times on mutual funds. So you think of it as about 30% to 35% growth in that page, too.

[Dipanjan Ghosh, analyst]

So just a small follow-up on the pay business. So the is us growing at somewhere around 20-ish sort of high 20s sort of a number in 3Q, 4Q of last year and also, that has scaled up to like 50, 60-plus percentage Y-o-Y. And do you see that the mix has broadly remained stable between MF and non-MF. So would it be fair to assume that this makes no non-MF clients coming in and whatever organic growth you're seeing on the MF pay side, I mean natural client additions or volume additions?

[Anuj Kumar, executive]

Yes. You can think of that being true. We go deeper into NBFCs, housing finance insurance. That is one of the trends, which will continue the plan.

[Operator]

The next question is from the line of Aman Soni from Invest Analytics Advisory LLP.

Congrats for a good set of number. Most of my questions are already answered. Just one question, like I was checking on your quarterly numbers 2 years back. So we were in the range of INR 200 crores to INR 250 crores kind of numbers. But we see last 4 quarters, we are consistently delivering decent numbers and currently quarterly run rate is approximately INR 350 crores. So from here on, how do you look -- how this trend is going to be for the next, say, 2 to 3 years?

[Anuj Kumar, executive]

So think of it this way that a large part of our fortunes are still linked to the cycle in the capital markets. There is no denying that because the MF market drives the cousins. The MF and the Demarter broking market drives the KRA business. The MF market drive 55% of the payments business. There is a significant densification too, but we will be married to this.

A lot of this, therefore, is about what view you take on the domestic capital markets. capital markets have similar growth. Then we'll see the revenue up the way you have seen it in recent years. Of course, there will be some periods of ups and downs in terms of like someone else said, growth titles will never be certain and will never be in the high 20s and 30s. So keep that in mind. But I mean, one thing I would certainly be with you that a lot of revenue up has been contributed by MF, but the non-MF has started kicking only in the last 2 years.

That only started kicking in the last 2 years in the last 8 quarters, you've seen status growth from KRA and payments. AIF has done a good job continuing to grow over 8%. We are waiting for one of our other markets for insurance to become a sensible contributor to revenue, and that will happen. Like I've always said, we are taking a bit of that, that will happen. I think the diversified part is growing. The main part has delivered quite well. So our ability to define scale is better than what it used to be 3 years back.

[Operator]

The next question is from the line of Dev Shah from Haitong Securities.

[Dev Shah, analyst]

Congratulations on a good set of numbers. Just a couple of questions from my side. First is a data keeping question. Can you give us the book value that you used to provide earlier as well as the SIP transactions processed and the live investor folios in that used to give earlier. Second is, do we still stand by the guidance of the non-MF proportion reaching almost 20-odd percent by FY '27. Do we see some kind of variations in that since the MF portion has grown so strongly. And lastly, could you throw some light on the new Finteplvrupi/NPS venture? And what's happening on that front? That's it from mine.

[Anuj Kumar, executive]

No, sure. So your question was how do we continue, how do we continue growing in the future, this one. Sorry, let me take the second part first. Your first was about the data we'll just see if we can give you some data. On the second part, you have said about MF and non-MF, whether we are holding on to 20% guidance, we're certainly holding on to do a 20% guidance. Just think of it this way that traditionally, the MF market has grown, our own base would have grown early to mid-teens. That has traditionally been through. And our call was that we will make the non-MF part grow in excess of 20%.

So if you take those 2 parts in isolation, what you will see is that the non-MF part has grown beyond 20%. It's now been growing 30%. And for the ensuing 4 to 6 quarters, although we don't want to make any specific forward-looking statements, we are confident of mid- to continue to happen in non-MF. So we are delivering the core metrics, what I control is the revenue growth in non-MF, which we are saying we'll continue growing at mid- to high 20s in a lucky quarter like we've had in the last 2 or 3 will grow upwards of 15%.

Now MF is a very large base -- MF revenue to continue hurting forward at 30% plus is perhaps a quarter or 2 phenomenon, it's unlikely to be a 2-year phenomenon. We expect that at some time, the MF revenues will go back to their teens and will not stay at the 30% cloud that we are at. So we're holding on to a forecast that we will continue driving diversification through this still growth rates and investments and drive the non-MF contribution -- revenue contribution to 20%.

On the first part, are we able to give any update?

[Sesha Ramcharan, executive]

Yes. So the live investor folios as of end was around INR 8.6 crores. And the unique investor service was INR 3.7 crores. Again, investor folio is a growth of 31% year-on-year is as of 30th of September. And the SIP transactions actually processed is around INR 17.8 crores systemic not in SIP, system in transaction process is INR 17.8 crores, again, that's up around 30% year-on-year.

[Operator]

The next question is from the line of Santosh from SBA HF.

[Unknown Analyst]

Congratulations for a good set of numbers. My question was about the previous participant when you asked about and NPS. So if you can just explain that, what does do relating into mutual fund business? That's the first question.

[Anuj Kumar, executive]

stated in the past is in the business of building large bespoke platforms, for large banks, that is what they've done in the past. When you see cancels well-served product. So well-served product is sold to PMS and AIF so that they can automate and digitize the process of onboarding individual customers to the PMs. What Findable sells is to large banks, let's say, a bank. They've built a large platform, which is used by the bank to have their PMSs, the ones who who the bank is doing custody, for them to onboard customers to the same platform. So that's the core product. It's live with one bank, getting built to another large bank. Liberty is a diversification where the same capability of being able to onboard the customer is then sold to a POP, a point of POP for pension if they are able to integrate with all the 3 CRAs and are able to onboard digitally. New customers coming in to buy pension.

[Unknown Analyst]

Okay. Great. So can you think of this other set products company specifically for banks and AIFs?

[Anuj Kumar, executive]

No. So it is a platform product. It would be -- I mean, it can be charged in different ways, basis assets basis the number of customers who come in. basis on a license fee. So the charging can be different, but it is obviously a platform or a software product.

[Unknown Analyst]

Okay. Great. Great. And what is the market share we may be holding here, sir?

[Anuj Kumar, executive]

We have not getting launched. We have still not reported the first well, the start of getting launched.

[Unknown Analyst]

Okay. But we are putting in the PowerPoint presentation, the new 6 7 new mandates you got in quarter 2 FY '25. so it's like what quarter and the store revenue yet?

[Anuj Kumar, executive]

The 6 7 that you have retained are total wins in AIF. These are collectivity of core AIF and PMS RTS serving wins, on accounting wins, wealth platform wins, analytics wins and custody wins. So it's a sigma of those. Right now, Liberty doesn't have a live client. We are in the process of closing the first deal.

[Unknown Analyst]

Understood, sir. And my second question is about are we object to any compliance audit by regulator? And if so, then by what date or year this has been done?

[Anuj Kumar, executive]

So you will see that all of cancels businesses related small parts may not be. So I think analytics may not be directly regulated. Almost every part is regulated, SEBI regulates and licenses the MF and the KRA businesses, RBI governance and licenses, the account aggregator and the payment aggregator, PFRD licenses and governance, the CRA and PS Business and RDA licenses in governance CAMS business. I don't know how to answer the second part of your question because the regulatory obligations, reporting obligations are very vast.

It is not that it is a once in a year audit, where we get the audit done, we sign off and then all of us go home. So think of it as a -- in your portfolio of companies and whatever you see, think of how many companies you can count, which have all the 4 regulators governing them, and which are 6 instances of these 4 regulators. I'm sure you would even find a handful. The regulatory scrutiny and the controls posture is extremely intense. It is not just at a bare regulation level. It also exists at the level of how we manage cybersecurity, how we manage BCP, how we manage employee screening, it's a cumulative of all of those.

[Unknown Analyst]

Truly. Yes, I understand that. So there's no like closure of audit for a particular year, let's say, till FY '24, it's been closed, something like that. Is it?

[Anuj Kumar, executive]

Yes. Just think of it that last year would have been closed by a very regulator.

[Operator]

Ladies and gentlemen, that was the last question. I would now like to hand the conference over to Mr. Ram Charan SR, CFO, for closing remarks.

[Sesha Ramcharan, executive]

Yes. Thank you.