Computer Age Management Services Limited analyst Q&A

Thank you very much. We will now begin the question -and-answer session. The first question is from the line of Supratim Datta from Jefferies.

I have here 3 sets of questions. Firstly, I wanted to understand how would the loss of 5 basis point exit load for mutual funds impact you? You have had one round of renegotiation of contracts last year, but would this result in another round of renegotiation of contracts? And what kind of impact could we expect from that and over what period? That would be the first one. Secondly, I wanted to understand how is the margins in the non -MF business cur rently tracking? And what kind of operating leverage are we able to get there? Lastly, on the payment aggregator and the Payment Gateway business, there has been strong growth there. However, the base business has only grown by around 25%. And when I look at the other businesses as well, the growth has been somewhere around 17%, 18% in most businesses. Given the smaller scale, just wanted to understand what would result in these businesses being able to grow faster as compared to the current run rate? Those are my 3 questions.

Sure. Thanks, Supratim. I'll try to take this in order. On the AMCs and the TERs -- sorry, I'm just continuing to hear...

Supratim, you may want to go on mute. There is a bit of background at your end.

Yes. Supratim, maybe there is...

Yes, I'll mute my end.

Okay. All right. Yes, this is a lot better. So on the overall TER adjustment, you, I'm sure, have been tracking this closely that the net dispensation being proposed is of marginal impact, not a humongous impact on the AMC. There are some benefits. There are many puts and takes, but I think there are some benefits on the GST side. And then there could be some dent in what they can charge because of the exit load going away. When you take these together, we believe that most of our clientele will not be impacted from any negative impact perspective. Some of the large clients may be impacted. Like you know that for people who run P&Ls, total TER regimes of 140, 150 bps at t he largest, coming to maybe 190, 200 bps for the smaller AMCs. This will be a small reset to make. Now will they come to us for any conversation, etcetera? We don't have any indication right now that all of that will happen. We've always stated that the a mount of value we sell for the price we charge: a, is very large; and secondly, it continues to scale every year. So we believe that we have full justification to retain the prices. Right now, I think we should just wait for any conversation to happen. First of all, for this final regime to settle down, if it settles down in the first quarter of next year and then for any conversation to happen. Even if conversations happen, we do not believe that this will be of a very large impact to us. Like we have sai d in the past, the impact could be -- I mean the boundaries of the impact could be INR20 crores, INR25 crores overall for CAMS, but we will wait and see. I don't want to jump into conjecturing on numbers and making estimates until we have a very clear view of what the impact is and what they are planning to do with this. That's part one of your question. On the non-MF business, the only way I would like to explain this to you, I'll split the answer in a few parts. One, businesses which are purely platform, so CAMS KRA and CAMSRep are 2 great examples of purely platform businesses. They have the ability to make EBITDA in the 30% to 40% range. CAMS KRA is already there, which means it makes an EBITDA in that range. From there, the smallest ones are loss -making because it takes a revenue line of about anywhere between, let's say, INR12 crores to INR15 crores of revenue line for these businesses to absorb costs. They are -- they all have a component of fixed cost. So some of them are loss-making, which still are not at breakeven. Insurance is near breakeven, but not at breakeven. Pension is loss-making, account aggregator is loss-making. So overall, it's our aspiration to move this entire portfolio of non -MF. It will not go to 40% to 50% EBITDA easily. That will come after maybe 5,6, 7 years. But in the next couple of years, it's our attempt to drive this to about 25% to 30% EBITDA. We bel ieve that is possible. This business now has a base of about INR230 crores, INR240 crores. It's growing at the rate of about INR40 crores to INR50 crores a year. And I think the objective for the management team is to move a large part of this incremental revenue into the bottom line. And because of the platform nature of most of these businesses, like I said, Rep and KRA are 2 great examples, Payment is also a very, very relevant example of a platform business. So we're very hopeful of driving -- that's our internal target to drive them to 25% to 30% EBITDA. The third part of your question was that in CAMSPay, what's happening, what is the growth trajectory. As you know, that from a portfolio perspective, we've stated that non -MF should grow 20% plus. Wit hin that, you will remember that we had 2 breakaway years when KRA grew very fast. They almost doubled themselves in 3 years. There was a time when AIF grew very fast. And I think in the last 2 years, we've seen CAMSPay grow very fast, which means CAMSPay used to be under INR30 crores business 2 years back. They scale from INR30 crores to INR50 crores, INR50 crores to -- close to INR70 crores this year. We see them growing from INR70 crores to INR100 crores next year. Some of this is just the base consumers buying more, which is one way to grow. And I think Payment Gateway was a new part of the offering. And when we grow, obviously, we'll have to keep doing all of these things. Just base clientele growing is very, very organic and is just dependent upon wh at the market buys. So we want to do both things. In the base, we want to grab share. In the new offering, we want to have those strategic offerings, which will lead to revenue growth. I think that team has been able to do both of these. The interesting part is that in the next 4 to 5 years, we are sure the way things are going, that this non-MF will be at least INR500 crores book for us in about 5 years. It continues to grow INR40 crores to INR50 crores a year. And at that level, at about a 30% EBITDA, it should be, let's say, INR125 crores to INR150 crores EBITDA range business. It's heading that way. It's heading that way. And therefore, we are very, very hopeful that we'll be able to deliver all of this. Those are broadly my answers to your questions. I f there's any follow -on, you can let us know.

Yes. Just one thing on the non -MF business, what is the current margin run rate? And on the CAMSPay side, I just wanted to understand what is the mix of non-MF clients and MF clients?

The current margins, we've seen some improvements happening over the quarters. A few years back, we were sub -10 percentage. At the current quarter, they are upwards of 13 percentage EBITDA as a bucket. And I'd just like to reiterate what Anuj said in terms of the bucket is mixed. It's got profit-making businesses and it's got also businesses that are not making profit. So -- but overall put together, they are kind of at a 13-plus percentage EBITDA for the quarter. In terms of CAMSPay, earlier, it w as entirely dependent on mutual funds. And now the dependence on the mutual fund revenue is less than 50% of the overall.

The next question comes from the line of Devesh Agarwal from IIFL Capital.

Sir, my first question would be on the MF yield. Could you share if there are any major AMCs which are coming up for renewal over the next 18 months?

So Devesh, so as we have indicated in the past, there are no major AMCs that are coming up for a renewal in the current financ ial -- in the upcoming financial year. There are a few midsized AMCs who will come, which are kind of due in the part of the year. But there are no major AMCs in the top 5 who are coming up for renewal in the current financial year. And that's why in the 6 months back we indicated, we're looking at a broadly stable yield regime for the next 18 months. So every year, there will be some AMCs that come forward, none of them are going to be the bigger AMCs that we had a renegotiation just a year or 2 back.

Right, sir. And sir, secondly, you recently won the mandate for Carnelian mutual fund. Could you just talk about how the competitive intensity is around the new -- around the -- basically for the winning the new mandates, how has been the competitive intensity? Is it coming down? Or is it still the same?

Devesh, the competitive intensity is still the same. You know that in '24, most of the mandates came to us. After that, I think we've made it very clear to the marketplace that we a re selling value. We are selling premium value. A large part of the market, which is inclined to pay that - - pay for that will obviously come to us. Carnelian is one example. There are some bids where price is perhaps the metric and any business, there ar e bids where price is perhaps a metric. You will not find us chasing those deals. I think the operating part of the argument is that we want to sustain and expand market share and AUM and want to sustain and expand market share in the most profitable and t he most remunerative parts of the overall stack. I think we've been able to successfully do that. Last calendar year, you know that we took 6 asset managers line, which is a record for CAMS. So starting from Angel Broking to Unifi, Jio BlackRock, Choice, Taurus, which was a migration. And then CeyBank, which is our only Sri Lanka client, all of these went live. So I think from an operating sustenance and resilience perspective, that's great news. But again, from a competitive intensity, I think we will let competition do whatever they choose is best for them. But focusing on value and premium value to the customers, I think, remains our endeavour, and that is the way we will continue going.

Right. And what is the target for this year? How many AMCs are we looking to take live?

We now have 4 which are -- 1 which are yet not live. So those 4 have to go live in financial year '26. I'm not counting the wins of '26. Typically, it takes sometimes 6 to 7 months, at least, and sometimes it takes about a year. So I think the 4 which we are carrying forward from the last year into this year, and maybe the 2 or 3 which we might win from now to June. So I will not be surprised if we take another 5 to 6 live this year.

And any p articular drag that you see on margins because of this 10 to 12 AMCs, which have gone live last year, and this year combined for FY '27 margins?

Actually, I will just talk about a few metrics, which we haven't really positioned yet because until we are 100% sure we want to expose it to all of you guys, we will not do it. I think we've, as a team, done a fantastic job on revenue per headcount and on overall headcount intensity of the business. If you clinically see headcount, headcount has remain ed flat in calendar '25, which means the headcount we entered with and the headcount we're exiting with is exactly the same. This is despite significantly expanded count of everything. So the automation and productivity benefits, we've just stated it as a line. I can convert into figures for you in a separate session. We didn't want to position it too hard right now. I think that's been a great journey. All the 6 AMCs, all the people who are employed there, it is all part of the base now. It's all part of the base. This year, Devesh, the way we see the overall technology interventions and the new platform capabilities, although it will be module by module, step by step, we are not going to do anything in one stroke. I expect these efficiencies to continue growing. So you will see that headcount expansion will be very muted. Revenue per headcount will be very large. I mean the expansion will be large. And therefore, all the cost and headcount related to taking new AMCs live will remain in the base and will be managed well within the base.

Just like to add one thing is, Devesh. As you know, the nature of the business is that the incremental cost will be mainly the manpower. And this is true of every new AMC, which is the initial part of ramping up, there will be some addition to the manpower, but we just made it so efficient that the platform is catering to every new customer, right? So there will be some amount of customization, but the major cost is only the 10, 15 people that you have to recruit additionally for that or in terms of transfer internally in case there is productivity improvements in other units. So it's not a significant, significant drag on the margins. If anything, when the revenue starts coming on these -- when the AMCs start ramping up, it would be a positive on the margins.

Right, sir. And sir, one final one. The cloud implementation that we were trying to do for our mutual fund RT operations. Any update on that? Where are we in that journey?

So on that journey, there are very exciting developments on -- overall, I'll just spend 2 minutes on this. On the form data entry part, which is the AI -based data extraction, I think we've done very well. And we are moving a part of the payload. You typically have a maker and a checker in every process. We are moving part of the maker payload completely into the platform. It is underway as we speak. So you will see that happen completely in Jan, Feb, March. On the compliance implementation, you would have seen the press releases, etcetera, on CAMS Lens, where we have taken a lot of the compliance payload and compliance payload is basically reading of circulars and documents issued by regulators, interpreting them, converting them into quizzes and te sts into FAQs, e tcetera. That product is completely ready. We announced this sometime in November. It is being used internally. We'll open it for the marketplace. And again, this was built as a small language model on top of an existing LLM. So that's production ready now. Our data lake and our data warehouse where we are moving things from the on -prem Oracle to the Google Cloud Alloy and BigQuery kind of setup. That is underway, too. That may not happen by March. That may happen in April, May, but that part will happen. And then there are several other exciting things. We had started building out a full module of transaction acceptance. That module will be also live or ready to go live in about April, May. So there are multiple things firing as I speak. There is a large team of engineers and of course, people, the SMEs from our base business who are involved with this. So I'm quite happy. It's a very humongous program. It has multiple people, cultural, partner, technology dimensions. It involves work that we have not don e in the past ever. And rearchitecting platforms, it takes companies very long. We chose to go on a module -by-module approach. So that part is coming out very well. We will also cover this in more detail in the analyst meet sometime in February.

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

So a few questions from my side. First, on the KRA business, do you see any sort of pricing regime change over the next few years? That was the first question. Second, at t he start of the call, you mentioned some number around INR20 crores to INR25 crores possible impact due to the mutual fund. Firstly, did I understand it correctly? And second, how do you arrive at this number? And if you can kind of shed some colour on that? And the third question is on the Payments business. Obviously, I mean, that has been growing at a very, very good run rate. Just wanted to understand in terms of new business horizons on the non -mutual fund side, is there either any inorganic activity or new cohorts where you would like to kind of penetrate into?

Sure, Dipanjan. So I'll take your questions in order. On the KRA business, you have seen that there's been a dent in the market, not a real dent, but maybe a partial dent that onboarding costs are high in the industry. Now for specific use cases and instances like the Cho ti SIP, etcetera, we have made sure that we offer to the industry because we eat off the same plate, we will never be predatory pricing technique people. We had offered fairly -- I mean, rates which are amenable to the scale and size of that business. For everything else, I think the rates across the market have been pretty stable. Is there a conversation with the industry that these prices will go down? You are reading the same statements that I'm reading. So obviously, I will not say no that this topic does not exist. The topic exists. Is that kind of an in -the-face topic and do I have to deal with it today? We will see. We will see. I think the -- from a regula tory perspective, the attempt always has been to make access easier and to sell things cheaper and cheaper. I think from a KRA perspective, for smaller formats, for the smaller SIPs, etcetera, very, very friendly rates already exist. So will this conversa tion which way this will head, we will see, and we are watching it closely. On your point number two, I think this math hasn't been done by me. This math has been done by you guys. I've read it. And I'm not either publicly endorsing it or denying. But the way this math kind of gets done is and I don't want to make it too complicated on the phone that there is a marginally positive part on some AMCs. It depends upon what PR you charge and what is the percentage split between your management fee and your exp enses. But for some, the GST advantages offset the accretion part. And for some, the exit load offsets the GST expansion, the GST advantage. So I think the way this math was done was our fraction, potential fraction, people computed and said that this is the sigma of all the potential contractions that can happen. We've read the math. We will see what conversations happen. Our belief has always been that we deliver humongous, sustained and expanding value to our clients. From a regulatory controls, produc t development perspective, like I said, just taking SIF live and the GIFT City offerings live has been very, very intense for us, but we just charge base rates. Our clients are very appreciative of these things. So the number is kind of an arithmetical clerical number. We will see what happens, and we are watching the situation closely. Thirdly, on the PA/PG part, I think what you asked is a very relevant question. We have -- like I said, we had 2 or 3 years of breakaway KRA revenue growth. We've had sustained AIF growth. And we've had about 3 years of breakaway PA/PG growth. Now the question is a valid question. It's a large market. If I take all payment enterprises and do a sigma of the revenue, that is certainly INR10,000 crores or more. Are as sets available? The answer is yes. However, it is not seen as a very profitable business at scale. It's not seen as a very profitable business, the UPI part, which is still not charged, and there are no exact signs on when that will become chargeable. So w hile the stack in terms of offering swizzles towards UPI, but UPI is not chargeable, isn't a great sign that investors want to see. So right now, we will not do, although we've looked at assets closely, we always continue to look at them. I think we believe that this is a part of our offering, which we want to scale to an extent, let's say, if we get to about INR90 crores to INR100 crores next year, and maybe about INR120 crores the year after, we will pause and see what we want to do. The profitability metric is important. So right now, I think it's unlikely that we will jump in and say some asset is -- the owners are selling. Therefore, we want to buy in the area of payments till we believe that this will align to the 30% or more EBITDA margins that we aspire to achieve from that.

Got it. Sir, just if I can squeeze in one small question. On the mutual fund side of the business, are there any asset managers where the renegotiation or the pricing -- repricing kind of happens on an annual basis or everything is more like a 2-, 3-, 5-year contract?

Annual basis is not something that happens. It's generally 3, Dipanjan, sometimes 2.5, 2 if there is some expectation of an event happening in the next couple of years. But I think the average you should take it as a 3-year period. Annual generally doesn't happen.

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

My first question was on the growth visibility -- revenue growth visibility on th e non-mutual fund business. Now I recall that number being closer to 25%, but there was a comment earlier that 20% is the number that looks more comfortable now. So I just wanted to double -click on that first. The second question was that the comment on c loud implementation is useful. And how do we see that along with whatever is your best judgment on what will happen to revenue yields? And how does that translate into EBITDA margins going forward? Do we still have enough scope to extract margins given these implementations?

Thank you, Abhijeet. On the non -mutual fund growth, there's 2 parts to it. Yes, the target is a 25% growth. I don't think we are really looking at that. But I know you had a very subdued first quarter number in terms of non -mutual fund growth. So I think what we are saying is we will get to that place. But for the year, we have again recorded in the last couple of quarters to get it close to 25%, and that is the long-term aim to get to 20%. But realistically, I think given t hat the first quarter was where it was, I think to expect in the near term, a 20% cumulative growth is, I think, realistic. But however, I think on a long -term basis, even on a medium -term basis, we are aspiring and we are confident of getting a 25% growth. I think what we are talking about is near a year from -- 1-year time frame from now where you should look at between 20% and 25%. On the cloud implementation, I think Anuj will answer.

So Abhijeet, on the cloud implementation, I think the only thing I will refer to is that in the last 10 years and let this register in the last 10 years, if I take out other business build -outs, but I see only MF, we've engineered the entire expansion with almost constant headcount. Headcount wouldn't have grown 5%, while assets are 5x, transactions are over 5x. Storage requirements, recordkeeping requirements, reconciliation, complaints, all of those numbers have grown, but we've kept the headcount constant. And therefore, automation in the base in general has been a very remarkable success story. You can go back and check even in the process industry, if they've been able to do this and if there are companies which have done that. And I'm talking of 2016 to 2025 time period. However, this is still working on the old platform. We know that there are humongous benefits to be gained if we move platforms, moving platforms is a painful process because we don't want to buy anything. We build everything ourselves because that IP is what I sell for value that you see i n the P&L. So we are building it now. I'll just give you an example, 300 crores e-mails are sent by us every year, 1 crores a day. Each e-mail is an artifact, which can be disputed, which does get disputed by intermediaries, customers, all kinds of people . And therefore, I reconcile 300 crore s e-mails every year. And that's just like of % of the work we do. But each part because anything can be referred to later. Do we do it most efficiently today? The answer is no, because the way it is engineered, it is not done efficiently. It has components of labour doing all of that. As we build the new platform on technology, which is developed in the last 3, 4, 5 years by some of the strongest names globally, a lot of these processes will become very, very efficien t, instant non-batch, which means I will not accumulate 1 lakh units to start the work. I can work instantly through APIs, etcetera. So we expect a lot of efficiency to accrue to the base. And when I said that despite all the expansion that has happened, 1 st January to 31st December, we did not increase headcount at all in the company. That's a real statement. Now these efficiencies will go much further, but we've been conservative in our style. It's very easy for me to put a number and start publishing it to you guys and circulate it. We are not doing it now on a purpose. One, of course, is the workforce angle because we do not want to publicly cover any contractions in workforce, we will not do that. And second, we want to be 100% sure that on a year -on-year, quarter -on-quarter basis, what advantages will accrue to investors and to the company and whether we can publish them or not. But I can tell you that the work for that started 1.5 years ago in June, July of '24. I personally monitor these things, so I know the detail that we are in a very good place right now. If you want specific answers, maybe 3 months from now, we should be in a position to give you a little more specific. We may never declare exact margin correlation of the new platform. I don't think we intend to do that. But you will see a lot of this in the P&L. That's where I will leave it.

I had one simple question. The delta improvement in the margins, wh at we saw in quarter -on- quarter basis is predominantly driven by the non -MF business? Is it -- or if you can give the delta change, how much it contributed from the new businesses and maybe MF in that sense?

So Sanketh, the delta actually is pr edominantly because of the mutual fund business only. The non-mutual fund increase in margins was there, but it was not significant enough to make more than 100 bps increase in margins. I think that level of margin did not happen non -mutual. Predominantly, it is because of the mutual fund business. And if you see also driven by the rationalization in the manpower cost is that we do not have any increase in the manpower cost in spite of a labour code charge, I think quarter -on-quarter, my manpower cost is stable, is static. In fact, there's no increase at all, minor decrease. So it is driven only by the core business. A very small part of it is because of the non -mutual fund business.

Understood. And you mentioned that your blended margin is 13 percentage for the non -MF part. So maybe given it has improved by 300 basis points on a year -on-year basis, if I understood right, then is it fair to say that a similar delta can happen in this line of business in a year or 2 in that sense, given a couple of businesses are pure platforms?

So the 10% reference rate was not last year. It was probably 2.5, 3 years back when we started tracking this very closely as a separate bucket. On a year -on-year basis, I think the margin increase will be close to 100 bps only. It's not 300 bps in terms of non -mutual fund business. But yes, going forward, we do expect once we start adding more revenue to the top line, as Anuj mentioned, these are all platform -based businesses, there could be a replication of thi s in terms of every year. And for us to get to in 3 years' time to a consolidated 20 percentage EBITDA is, I think, the base. We should be something more than that, but at least to get there within the next 3 years, which means that as we add -- keep adding revenue, the increase in margins will be significant. So we hope to get to this 20% EBITDA margin within the next 3 years for the non -mutual fund.

Okay. Okay. Sir, basically, a 700 basis point improvement in the non -MF business in 3 -year period is possible from the current levels?

It is absolutely possible, yes.

Understood. Understood. And lastly, given so many mutual funds have got onboarded in the last couple of years, this people count control is sustainable? Or you think ultimately, somewhere we need to start adding people to cater to the requirements in that sense?

You will see that we have just inserted one line on technology -based productivity. So while all these new MFs need teams. Our philosophy has been dedicated headcount fenced areas for every new client. We don't give them any shared facility to the extent possible. All that has happened. I think all these additions have been offset by efficiencies that we've created in other places, some led by the n ew platform, some led by past innovations in technology and the base stack itself. So that will continue. That will continue. You will only see it gaining more momentum. It will not slow down. I think it's a 4-, 5-year journey from now where you will continue seeing these efficiencies play out.

So Anuj, is it fair to say that with no significant man count addition with productivity gains, you can still cater to the newer funds even if you have a dedicated team to the newer funds?

Yes. The last full year was vindication of this. Just look at the last 4 years, we've stated in public that we've taken the 6 clients and the SIFs live. The net headcount is flat to lower, like Ram said. Those are the real figures.

So in simple words, then with more people addition, is it fair to say that a pure MF business, not considering the new non -MF business, there is a scope -- assume yield pressure doesn't come because of the T ER or something of that kind, then is it fair to say that the product ivity gains itself can expand your margins by maybe another 100, 200 basis points in a couple of years?

So I'd just like to say a couple of points there, Sanketh. One is that while there is no headcount increase, there will be a remuneration in crease, which is your increments and the annual increments will happen. So it's not as if the labour cost is going to remain the same. So there will be some cost pressure because you know that every year, there has to be an appraisal that goes to the emplo yees. In a good year, it's probably more than 10%; a bad year, it's probably 7%, 8%. So that's a cost that will come in. But as we say, even if there is moderate yield pressure and even if there is an impact on the salary cost and given the technology inv estments that we'll continue to make and the hiring that we continue to do for the platform, to expect 100 bps creep up in margins over the next year or 2 is something that is on the cards. But again, there are several moving parts to this. We would stick to our revenue -- to our margin guidance to say that we will be more than 45%. We will creep up to 46% and 47% in good quarters. But to predict anything more than that will be a little premature.

The next question comes from the line of Sucrit D . Patil from Eyesight Fintrade Private Limited.

I have 2 questions. My first question to Mr. Anuj. As CAMS expands beyond its core mutual fund service into insurance, fintech and digital platforms, how do you see the revenue mix evolving o ver the next 2 to 3 years? And what strategic priorities, whether in technology innovation, partnerships or customer engagement will be most critical to ensure CAMS maintain the backbone of India's financial ecosystem? That's my first question. I'll ask my second question after.

So again, the only thing I'll point your attention to is that consistently over the past 6 years since we started facing the market, there's been no change in our position on any of the things you asked, and that covers most topics. We don't want to be an overdiversified company. It's not our attempt. I think investors pay value for the kind of business they like, and we don't want to make it a mishmash. We publicly stated we'd like to get to about 20% of revenue contribution from non-MF. We are steadfastly chasing that as a goal. If we are able to expand revenue by about INR150 crores to INR200 crores every year in the next 3 years, we will be INR2,000 crore s company soon. That's in 3 years or 2.5 years. At that time, 20% of non-MF is INR400 crores, we would like to get there. In MF, I think if you've just seen our leadership, and obviously, some of you do attend the annual -- the meet we do for analysts, you would have seen that not just the top -level leadership, but people beyond and people beyond we have made significant inve stments. None of this is lip service. None of this is showing you the mugshot of people who don't work for us. All of this is clearly rupee value that we are delivering to the marketplace. If you ask me one single investment that I've made in my time, it is this. Today, we have literally between 50 to 100 engineers sourced from the IITs. And if I include the IIMs and the NIITs and some of the Tier 1 institutes, this number will be about 150, which we acquired in the last 2.5 years, 3 years to build out the platform, be part of operations, be part of product, etcetera. So that remains. We will not become over diversified. We will not make acquisitions just to make the top line look nicer. So our stated commitment to the domestic market and despite all the t emptations, you would have seen that we've been saying this consistently that till the domestic market worries us in some form, we are committed to the domestic market. This is the arena we are playing in. Within the domestic market, 80% of our revenue sh ould come from MFs and related market segments. We will remain there. Now the balance part, when it becomes INR400 crores or INR500 crores meets its own attention. For insurance companies, for example, we relate with the regulators and the top insurance co mpanies, same for payments. Those 2 certainly, to an extent, AIF and KRA, although AIF is a very splintered business, there are not 60, but thousands of them. So cost of sales, etcetera, increases. For every product class, therefore, I think the dynamics are different. Mutual fund is concentrated business. The rest of them don't have concentration. They are splitted businesses. And therefore, cost of sales will be high. Cost of product can be high where we are competing with the fintechs and the start-ups, which is like the account aggregator business. I don't think I have a single answer for your question. All I will say is that in the last 10 years, we've been able to kind of stitch this strategy, which plays well to the market to gain acceptance, to be the number 1 or number 2 player in every segment we are in. And today, you will see that at 68% market share, we are the number 1 player in MFRT A. At 50% market share, we are the number 1 player in alternatives outsourcing. At 40% market share, we are either number 1 or number 2 insurance repository. At close to 20%, we are the number 2 in KRA. So these are the positions we are aspiring for. Can I get there for every business? The answer is no. We'll be very happy if we have one core business, which is kin d of firing on all cylinders, and we have 3 other businesses which are firing on all cylinders. You don't have companies which have 6 or 7 leadership businesses, very tough to get there. The rules of concentration apply to all of us, right? You can't be an athlete doing 3 sports. So we are cognizant of that, but that perhaps answers your question. Anything else that you need, maybe we can have a separate dialogue.

Fair enough. My second question is to Mr. Ram Charan. With CAMS consistently delivering strong margins, how are you planning to sustain profitability while funding growth in newer businesses? Looking ahead, what is your framework for balancing operating leverage, disciplined capital allocation and digital cost efficiency to drive R OE and long -term sustainability?

Sure. As you know that the business that we operate in offers some amount of operating leverage to us. Well, there is always puts and takes, right? So from a margin perspective, there is always the pressure that you hit on the employee cost. There is a yield pressure that you -- that is abated now, but still is there to some extent. And then there is the entire technology investments and regulatory pressures that you need to keep investing. So this is offset by what we do in the productivity enhancements and technology, etcetera. So it's a constant kind of puts and takes between both. And we have managed to get a balance between the 2 and have seen that in that post listing, we've been able to increase our margin s by 100 bps a year at least. And now that we are at a steady state of between 45 percentage and 46 percentage. At any point of this journey, we've never optimized on our investments in technology. We never investments in non -mutual fund businesses. We ha ve built out several products and platforms. We are cognizant of the fact that these could be the -- one of these could be the breakout revenue opportunity for us in the future also. So we have never optimized on the investments assets. Even in quarters w here the margins were 42 percentage, 43 percentage, we did not optimize on investments. We continue to build the products. We have released several such products in terms of AIF, the WealthServ, account aggregator product, the pension product and even the several enhancements that's happened from a mutual fund perspective. So I think the future is secured from that perspective. We have invested for the future. We invested on technology. We have get an optimal look at the cost so that they don't kind of run away in terms of the operating cost. At the same time, we have enough of operating leverage to cover the yield depletion. So I think we are in a good place from a margin perspective. And going forward, we don't see much of a pressure on this also.

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

Good set of numbers. Anuj, the first is a bit of a structural question as to there are a lot of new MFs, again, getting licenses to open up and more are in the pipe line, more people wanting to open mutual funds. So how is the landscape now in terms of the competitive intensity in acquiring new AMCs into the fold? So could, if you could throw some light there? Because I think in the past few years, there has been a hi gh degree of competitive intensity to acquire the new AMCs. So what is the kind of intensity right now that you're seeing?

So like we said, there were 2 kinds of people who wanted to get into mutual funds. There were the broking companies and t here were the PMS and AIF players. It continues to remain in those 2 boxes. Most of the new applicants are in either the first or the second box. Despite the increased network requirements, etcetera, there is obviously a trend to give a lot more licenses and make this a less concentrated industry than it has been. That is perhaps at a policy level, the thought process. We have been clear, like I said at the beginning of this call, that we are selling value to our customers, both existing and new ones. And therefore, there are logos that we want, and we go completely after them. And then there could be -- there will always be, like I said, in every market, not just this market where people want to buy the lowest price for either constraints or just the approach towards buying. We are not sure whether we want to be part of each one of those bids. Last 1 year, for example, we took 6 AMCs live. Some of the new AMCs, which we took live in '23 and '24 will head towards INR10,000 crores AUM mark soon. One of them has already headed towards 10,000. So some of them are making good progress. But we are selling value. We don't want to be competing on price going to the bottom of the barrel or scraping the bottom. We will deliver sustained value. So we expect new AMCs to come in, like I said, 6 of them went live last year, 4 new domestic logos, one was a domestic transition, one was a Sri Lankan logo. That leaves 4 logos to be taken live in '26, which will be taken live by us, definitely within '26, I think. Some of the new wins, which happened from now to June will also be eligible to go live in '26. So I think it will be about 5 to 6 go-lives, which I think is a very good number for us to kind of ensure that we are doing justice to our clients. We're giving them high -quality operating environments, strong talent and clients, obviously, who appreciate the value that CAMS brings to the table. So that's been the approach so far.

Got that. And secondly, on the -- again, a structural bit, do you think that the RTA industry at any point in future, say, like next 3, 4 years, could move to a fixed pricing mechanism rather than a percentage of AUM basis? Do you think that is a better approach?

Well, I'll give you the honest answer that if I had a fixed cost or price portfolio, a fixed price per transaction, a fixed price for any activity, I would perhaps end up making more money than I make today. Our price portfolio has been dipping almost every year for the last 10 years. Our price per transaction has been dipping every year for the last 8 or 9 years. So it's just that it's a more uncertain regime than the regime today. We've been used to a certain regime and used to managing cost and profit in a certain regime. It will be a humongous change to impleme nt something like that. The change requests will have to be priced. A lot of administrative and pricing work and scoping work will come in, which I don't think we, as an industry, are ready for. So we are happy with the way things are happening, and we are happy the entire retailization. We gave you a number of CAMS registering 1.2 crores SIPs in a quarter. 10 or 11 years back, this number used to be less than 1/10, right? No, my revenue has not grown 10x. I could have charged cost per SIP registration, an d we would have been a richer company. But all of that is meant for other people. I think we are quite happy with the pricing, so are our clients. And I don't think any dramatic shifts in optimizing it for either side, either the buyer or seller the way right now.

Got that. Just some bookkeeping questions. On the employee cost, there has been a flattish trajectory or marginal decline, in fact, sequentially. Ram, anything on the new labour law that the impact has yet to be taken or anything on that sort?

So Prayesh, so as you know, that labour law was notified on 21st of November. And I think there are some rules that are yet to be notified, which is expected to be April 1. There are 4 broad lens to it. People are talking about a gra tuity impact, a possible ESI impact, a possible fraud and fund impact and a possible even catchment impact. In our assessment, the biggest impact will be the gratuity impact. Others could be minor, if any. And we have taken the full impact of the gratuity . So we have done an actual valuation, and hence, I think going forward from a labour code perspective, we do not expect a significant cost to come to the books. I think that has been fully provided for in the current quarter.

Right. And last bit on the seasonality in CAMSPay, like in the fourth quarter of FY '25, we had seen a very sharp jump from about INR11 crores to about INR16 crores revenue. That's because the CAMSPay is a part of insurance as well, we should expect someth ing similar. Is that the right way to think about seasonality in CAMSPay?

It is true that there will be an uptick in the revenue in Q4, Prayesh, that is expected. However, we are trying to normalize things so that we don't see a big dip in Q1 a lso. There are enough efforts underway to broad base the client base to ensure that doesn't happen. But to your limited question of whether there's going to be a spike in Q4, we do expect Q4 revenue to grow over Q3 revenue.

Thank you, and thank you to all the participants for your participation and spending time on CAMS. As always, if you have any queries , please feel free to reach out to Anish or to Orient Capital. We'll be happy to take your meetings and questions. Thank you.

On behalf of MUFG, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.