Computer Age Management Services Ltd. (CAMS) Q4 2022 Earnings Concall Transcript

Computer Age Management Services Ltd. (NSE: CAMS) Q4 2022 Earnings Concall dated May. 06, 2022

Corporate Participants:

Anuj Kumar — Managing Director

Ram Charan Sesharaman — Chief Financial Officer

Analysts:

David Sagawa — IIFL Securities — Analyst

Punit Kumar — Reliable Investments — Analyst

Dipanjan Ghosh — Kotak Securities — Analyst

Sanjay Awatramani — Envision Capital — Analyst

Kaushik Agarwal — Haitong Securities — Analyst

Jatin Jada — Star Capital — Analyst

Prasheel Shah — CapGrow Capital — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Computer Age Management Services Limited Q4 FY ’20 Earnings Conference Call. We have with us today on the call Mr. Anuj Kumar, Managing Director; Mr. Ram Charan, CFO; Mr. Anish Sawlani, Head of Investor Relations. We requested participants to kindly refer to the safe harbor statement in the earnings presentation. [Operator Instructions]

I now hand the conference over to Mr. Anuj Kumar, Managing Director, for his opening remarks. Thank you, and over to you, Sir.

Anuj Kumar — Managing Director

Thank you, Inba, and good morning to all the participants. Thanks for taking the time out to join this earnings call. Like the format we presented in the past, we will take you through a presentation. And then maybe in about 20, 25 minutes, we would be done, and then we should have enough time for Q&A. Overall, as all of you know, FY ’22 has been a strong year compared to the reasonably lean performance that we saw in FY ’21, FY ’22 was a strong year across all key metrics, whether you see financial or operating metrics, investor interest in mutual funds, our product launches, our digital properties, etc.

So we will cover all of these aspects in the presentation, and I will begin. In terms of key highlights, the first one that I would like to mention is that Xero as a potential asset manager, which is about to join the marketplace has opted to go with Cam. Some of you may have noticed this in the exchange filing we made about a week or 10 days back, we haven’t yet done an official press release. But just in terms of the future outlook, although it does take a new AMC a lot of time to build business, that’s a very positive outcome for CAMS. The second is that we have announced to you earlier, and you would have seen it in the press that in order to strengthen our overall position in the alternatives market, and we have a very strong play going, we made a strategic acquisition in a fintech platform called [Indecipherable] with services both PMs and AIF operators that have now got concluded in the month of April and CAMS in this company out of the platform.

On account aggregator, the CAMS since account aggregator platform went live in 4Q of the year with two clients. We’ve had 10 drove wins in the fourth quarter. These are largely in the area of brokerages, housing finance, in tax, NBFCs and banks, one medium-sized bank is to the Gina platform. Volumes are scaling up, not very rapidly. Some of the largest banks haven’t yet joined in. There’s some delay there. But the very heart in case of meals is that Sabi has now officially confirmed that Saigon entities will be joining the account aggregate architecture that will happen in the coming months. So that broadens out the play from lending entities to capital market entities.

And then, of course, our expectation is that both insurance and pension will follow just to complete that entire story. We’ve spoken about our NPS platform. I’m sure a lot of you would have joined the long ceremony of the platform, which was inaugurated by the PFRD Chairman. Very pleased to share with you that the ENPS product, which is a direct-to-consumer electronic product bought directly, not off the payroll, went live sometime in March. In the month of April, and I’m just talking of the first completed month, we are in the first week of May right now. We’ve achieved over 4% share.

These are very early days shares, absolute volumes, etc., will start making a sense once we’ve delivered all of this for the first maybe four or five months. But just from a perspective of something which have gone live recently, we now have 4% share in ENPS registrations and the number two CRA position only in ENPS [Indecipherable] and POP business has yet to start acquiring the POP business. Hopefully, we’ll start acquiring consumers by the end of this month, beginning of next. But in the ENPS part, we’ve seen a strong stuff. You would have read the CAMS press new algo, new product variant on a deep level for tax rating by trolling large amounts of investor data, including social video presence, etc., to trace the untraceable policyholders who are due for receiving policy benefits but haven’t gotten yet.

Uncleared amounts continue to be a problem that every sector of the financial services industry is dealing with insurance, especially because that is the only reason why people buy insurance. Five large private sector life insurers have now joined and are subscribed to the solution, and we are expecting more to come in this is overall accretive to the business. And we are very hopeful that this very deeply intellectually imbued algorithmic way of doing tracing of customers who are otherwise not available will create reports in the market and invest in the consumers. And then on CAMS pay, we launched UPI Autopay and Instamart. It is an industry first from a mutual fund industry perspective, which for industry did not have these products. We have now gone live and showing very strong early results.

So in summary, those were the 506 things that I wanted to call out across our various business lines. As we dive deeper, I will leave you with some data, and this data is about various segments of the mutual fund market, how have you done in terms of share of assets and share of sales. I mean, if you cones this entire picture, it is about absolute asset momentum and growth in share. It’s about absolute sales momentum and growth in share, and we will talk about these as much more in the equity segment and then overall. Equity share growth, which is equity AUM, we grew by INR3.3 lakh crores and just an unprecedented number, which we hadn’t seen in previous years. This [Indecipherable] actually the growth of equity assets from March of 21 to March 22. If you take the rest of the market, this is about 183% of the overall rest of the market, the [Indecipherable] number.

The rest of the market grew by about INR1.8 lakh crore, our share in industry equity assets. So you’ve seen our 70% market share, which is obviously a different asset classes have been different. In equity assets, this share has crept up 62.5% in March 21 to 65% in March 22, so that’s about a 2.5% share gain in this pure equity assets during this time period. If I take you to gross sales, gross sales and net sales are both important gross sales. I think because of the more primary metric than net sales because net sales balance out people who are exiting, which is about people who are coming in. In equity, 64% share in gross sales, INR4.29 crores with the rest of the industry doing 2.4%. And in debt, this share was 77%. So 77% of all debt gross sales came to CAMservice funds, which is INR6.19 lakh crore and INR1.8 lakh crore done by the rest of the industry.

All numbers in lakh crores as far as AUM numbers are concerned. If we cubesa together, we take overall gross sales merging all the segments, 30% share canceled at INR66 lakh crore of gross sales, rest of the end-user, and this equity includes hybrid and arbitrage. These are standard definition — standard after definitions and so definitions, which play out here. On the NFO side, which you know was again after a Hiter, very strong momentum creating a set of events in the industry played out almost throughout the year, played out very intensely in August to December and then to some extent in January to March, and of course, there is a small time period for which there will be no in appeals. Overall, as industry did over INR52,000 crores, so at 70% share. The rest of the industry did about INR22,000 crores across asset classes.

So overall, 70% in the equity and for insurance, and in overall inflows for NFOs and in oral includes [Indecipherable] with share of 65%. So whether you see overall gross sales, you see share of the equity asset expanding from 6 to 15 to 65. — as the overall gross sales at 70% share. You can see equity Finflows, 70% share. And if you take overall net inflows, that was 65%. Where are we in the client base? What are the clients doing? — top five AMCs by AUM constitute cans clientele as of the quarter end. 10 of the top five AMCs construed our client team. And then interestingly, four of the top five AMCs based on equity assets, too. So we’ve discussed equity market share in various forums. I just wanted to make sure that some of that flavor — on the share side, on industrial rankings purely on equity and on the NFO sections comes out because that kind of rounds up the entire story — on transactions, which you know, as participation increases eduction counts increase in the industry.

Just tracing through first quarter of the year to fourth quarter. We rose to a historic high of 115 million transactions, so INR11.5 crores. This was INR11 crores in the previous quarter, October November, December, was just over INR10 crores in the quarter before that, which was second quarter of the year, July or September. — and was INR8.75 crores in the quarter before that.

So you can consistently see and you’re aware that a lot of this is just SIP participation is SIP market share and site volumes, all of which have gone through a very robust kick up in the last 6 to 8 months. So that’s largely contributed 1Q total transaction 3.75 crore and then 11.5% in the fourth quarter. So within the year, from actual volume has gone up by almost INR3 crore, INR5 crore, which is, again, I don’t recollect when the numbers look so strong, so competed — on SIP registrations.

And you have seen that SIP registrations have become a I would say a more secular or more steady foundational metric than something which reacts to every income cycle, every interest rate cycle, every change in the marketplace. Those numbers have been very, very heartful. CAM’s new SIP registrations in FY ’21 was just under 73 lakh. That has grown to 158 lakh. So that number has more than doubled from FY ’21 to FY ’22. Overall, if you see 72.9% was a 52% share of the STA registration market ’21 — and the $158 million in FY ’22 is a 59% share. So 7% BMN share, 58% to 59% and more than doubling of the volume.

Despite us having created a number of utilities where investors can stop all their SIPs are van in other things. The only one metric that you need to look at to see how steady the SIB collections market concern is towards the SIP collections themselves because there’s no net of gross number there because that’s just money which comes on an investor bank. And you’ve been seeing almost INR40 crore to INR50 crore increments at industry level in the last maybe three to four quarters.

So those are stable on-ground foundational metric — with that said, do not react to every change in marketplace and marketplace dynamics, which is good for the industry because that is a long-term decision of saving an investment which investor has taken. And he knows that seasonality is a part of this entire poopooed — moving to digital. I think a fantastic story in digital. I’ll talk about MycaMsfirst, which continues to remain the largest mobile app in the mutual fund area of the country with 5 million registered users significant uptake in new people registering on to Micron.

So 11 lakh new investors were added to my can, 26% more than FY ’21. So you can see that almost 20% of the $5 million or a little more than that 35% investors came only in one financially. If you took the sigma of all digital transactions across CAM service funds, and the sort of fraction of my account. That’s 1/3, one out of three digital transactions for CAP service funds coming through my fans, which is very heartening.

On Etest Central, which was built and put out in the market by Kansane gain, a strong journey forward. The mobile arm version was launched and as over 40,000 downloads. The app is rated strongly ’04 and both the player and the absolute close to two lakh investor registrations, almost two lakh nonfinancial transactions. — This sort of one lakh cash downloads and average one so over 7,000 7,500 a day.

Now obviously, for a platform of this nature, we are expecting the log in cessions, will be several x times will be fight of this number over a period of time. But given the fact that we’ve been in the market in the last three or four months, that’s a very hard thing. Financial transactions entail will go live in the current quarter. Just go back Overall, CAMS digital properties, service and our bigger AUM of just short of INR8 lakh crores. So if you took the entire picture quite approximately the aggregate of INR27 lakh crore. — macro comes under the purview of Cardinal to per which is just an indication of the increasing penetration of digital usage amongst consumers and the steady relevant share gain of capital properties within that segment, I think it just mitigates those two things.

The other thing that I want to talk to you about and which we’ve spoken often in both individual investor meetings, group meetings and an earnings call is the behavior of the alternative markets, especially EIS. In the last quarter or two, we cemented our position in this market as the domestic EIF services market leader.

And I’m talking about hard bed trends, and I’ll tell you what heart and soft metrics are, but overall assets under administration of INR1.4 lakh crores — we don’t run like I’ve said to many of you only stamp duty only marginal service mandate, these are full service markets, 15 new sustained wins in the last quarter in 4Q FY ’22. Given the fact you know that while there are upwards of 800 AIF and PMS operation, the unique operators are perhaps under 300, which is that one entity could have multiple schemes.

We continue to penetrate this market and make strong wins. On the digital onboarding side, which is the product we put out in the market in longer life for the last 7 to 8 months. Over 30 funds are tied up for AF and CMS distal onboarding with either Camso. We are definitely wanting to scale this number to get to, let’s say, 100 in the next 12 months. We also see that almost half the funds which are signing up for digital haven’t yet signed up with us on the DS Services side, which is a very heartening route to market.

We’ve opened a new route to the market, which means equity which are still not completely bought in on outsourcing of the RTM offering already coming in for the digital and creates a strong scope for us to win the other scope as it comes in. On Gifterver, the offer is operational as we said in the last call, live with four clients, more and more expression of interest continues to come in from the market.

And then like I said, we’ve deepened our digital footprint in the AIF ecosystem with a 51% stake in the technology. I spoke about account aggregator. We spoke about the fact that we’ve had 10 opens two clients on our line and increasingly, clients are going live in this market. The semi-government entities will now begin to show interest as officially the adjustment from the regulators comes.

So we expect that part to move quickly during the balance part of the current year and current financial year and in the next. And then I spoke about NPS and EPS have explored a 4% share in the MPS market during the last month. In terms of share, I think all these numbers are known to you. So I will go…

[Technical Issues]

Operator

Sorry, Mr. Anuj Kumar. We’re not able to hear you, sir. Are you still connected?

Anuj Kumar — Managing Director

Yes, I’m connected. Can you hear me now?

Operator

Yes, sir. Thank you.

Anuj Kumar — Managing Director

So on the market share, etc., you know the numbers, but I will quickly take you through these, especially for 4Q based on quarterly AUM, 69% market share. Net flows into equity assets despite some of the overhangs that we’ve seen in the overall marketplace in capital markets, both in globally, those inflows remained positive in 4Q of FY ’22. Inflows through SIP. This is during the market timely collection for the quarter were up 7.2% quarter-on-quarter.

In terms of absolute numbers, INR26.7 lakh crore will be quarter average assets serviced by comps within which equity was INR11 lakh crores, lightly low. This grew overall assets grew almost 20% year-on-year and equity grew over 40%. Within this, of the 26.7 when I just suppose with the industry sets, that’s INR38.8 lakh crore. Industry equity at 17.2%. We are even out of that move forward.

In terms of transaction volumes, like I said, grew from about INR8.75 crores to 11.5. So that’s quarter-on-quarter, 4% up, but a very strong 34% increase year-on-year. Live investor portfolios for the quarter touched 51.6 million, so INR5.16 crores, up 38% year-on-year. We had a very steady growth. IB book, has almost touched INR3 crores, just a lack or short of that, so at 29.9 million, up 39% year-on-year. Unique investor service to INR2.29 crores — INR22.9 million, again, 38% increase year-on-year. And transactions, which kind of form the bedrock of the overall transaction accounts at 87.5 million, 75 crores, up 42% year-on-year.

So that’s largely the story on transaction counts, digital sales market share, [Indecipherable] market share, asset market share, cycle collection, those kind of things. Like I said, the overhang of interest rates, incidents around global fees or lack of fees, inflation, etc., continue to be what they are. And you heard enough industry experts speak about we’re not going into those aspects in detail.

But the impression we want to leave with you is that in terms of foundational building blocks, which is investors coming in, investors reposing their feet coming in for monthly formats of saving in investment coming through SIP, transacting with us, monitoring the portfolio, adding monies. All of those trends have largely remained intact, especially between 3Q to 4Q. So we’re not seeing any impact yet.

And that is the positive underpinning of the entire marketplace. And of course, the fact that despite the overhang overall assets and equity assets have continued to remain stable in the market.

I’ll pause here and hand over to Ram Charan, to take us through the financials.

Ram Charan Sesharaman — Chief Financial Officer

Thank you, Anuj. I’ll just take you through the yearly financial highlights for FY ’22 and some flavor on the quarter that went by. As Anuj mentioned, FY ’22 was a very strong year for comps in terms of financials. The AUM that we track, which is the average AUM, be 27.6% in the year. That is FY ’21 versus FY ’22. So our revenue kind of tracked this and revenue grew by around 29%. It ended at INR909.7 crores, up to 29% over INR705 crores, which we closed in the earlier year.

Out of this, the MF revenue, again, almost tracked the entire growth in AUM, which is — it grew by 28.8%. The AUM grew by 28%, so it almost tracked the entire growth of AUM. The MF revenue was at INR820 crores versus INR636 crores the earlier year, in which the asset-based revenue, again healthy growth tracking the AUM growth, asset-based revenue grew by 27% year-on-year for the financial year. It ended at INR690 crores versus INR542 crores for the following year.

So the strong growth in AUM is reflected entirely in the growth in asset-based revenue. And the non-asset based revenue, which is our transaction transaction-based revenue, which is out-of-pocket expenses, call central revenue, etc. That also had a healthy growth of 38.6%, and it was INR130 crores for the year as opposed to INR94 crores for the following year.

The non-MF revenue did a smart recovery when compared to last year, non-MF revenue, if you will recollect, consists of the AF business, the Campsbay business, the KRA, and the insurance repository business and some amount of the software services that we do to mutual fund clients, that grew almost 30% year-on-year. It ended up around INR90 crores, INR89.6 crores to be precise as opposed to INR68 crores.

So overall, a very healthy growth in the top line across all categories in MF that is asset non-asset [Indecipherable] on MF. From a profitability perspective, we ended up with a very strong operating EBITDA of INR400 crores, INR400.39 to be precise. Which was actually a 47% growth in EBITDA over the last year. Last year, the EBITDA FY ’21 was INR272 crores, and the operating EBITDA percentage, if you don’t consider leases capitalization is around 44%. This again is a very large growth when compared to last year, tracking the growth in revenue and the cost optimization that has happened.

In terms of PBT, we ended the year with INR382.65 crores, which is up almost 40% over the last year, last year number of INR274 crores. In fact, it was up almost 40%, and INR286 crores was the PAT for the FY ’22 as opposed INR205 crores for the last year. So the profitability against strong numbers, backed by increase in top line as well as cost arbitrage in some of the heads. So we ended up with a high net profit margin of 31 percentage. And last year, the percentage was 28%. So improvement in profitability metrics also for the financial year.

So to give you some flavor of the Q4 numbers in terms of revenue, we ended Q4 with a revenue of INR243 crores — INR243.18 which was up 21.7% year-on-year, the same quarter of FY ’21. This actually breaks down into an MF revenue of INR217 crores, which was again up 20.6% year-on-year. And asset-based revenue was at INR152 crores — sorry, INR181 crores, which was up 19% year-on-year. Again, the asset-based revenue growth tracks the increase in AUM, which was up around 19.6%. The asset base revenue was up 19%.

Similarly, from a non-asset-based revenue, it was up almost 30% year-on-year on the back of improvement in transaction revenue as well as call central and other applications. This ended at INR36 crores as opposed to INR28 crores in the last year. And in terms of non-MF revenue, the quarter — we clocked a revenue of around INR25.54 crores. Again, it was up around 32% over the last year. Growth across all verticals, including AIF, CAMSpay, CAMSrep contributing to this 32% increase in growth.

In terms of quarter-on-quarter growth, there was a small — the AUM actually remained flat on a quarter-on-quarter basis. So the MF revenue growth was also muted. It was marginal. And the — but the non-MF revenue actually grew substantially quarter-on-quarter to 15% almost. So that was at INR25 crores as opposed to INR22 crores last year. So this resulted in an overall small increase margin increase in the revenues.

And the EBITDA, given that we continue to invest in our new initiatives with regard to the CRA business that Ravi spoke about, the account aggregator business, the PSP business, the investments we continue to make. So there was a small decline sequentially on the EBITDA margins and the EBITDA number by INR1.5 crores from an operating perspective. This is a flavor of the revenue and the profitability for the quarter. I’ll just hand it back for more questions that you may have.

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [operator instruction] We’ll take the first question from the line of David Sagawa from IIFL Securities. Please go ahead.

David Sagawa — IIFL Securities — Analyst

Good morning, sir and congratulations on a good set of numbers. Firstly, I wanted to understand on the quarterly mutual fund revenues. If I divide that with the assets that you service, there has been an improvement in the yields on a sequential basis. Could you explain that because the assets are more or less similar and so is the equity share?

Ram Charan Sesharaman — Chief Financial Officer

So Davis, actually, there is one important change that happened to the statement that you’re making, which is that the equity mix has improved marginally. If you see, compared to last time, it’s almost like a percentage in terms of the equity assets overall. So that is a beneficial impact. And even within that, there are some inter customer movements that happened in the last quarter, if not every customer actually did not grow. So there were some customers who grew in the so that was a favorable impact of that, too. So both put together, that is — you’re right.

The yields have inched up marginally in the quarter, which is, again, a validation of what we have been speaking earlier. We have always been saying that if the assets remain stable or degrow, the E depletion will not happen, will have been stable or there will be a marginal increase. I think the numbers for the current quarter kind of seem to validate our commentary on that earlier.

David Sagawa — IIFL Securities — Analyst

Secondly, sir, on your non-asset-based mutual fund revenues. Could you highlight how much comes from the transaction? And what would the share of the transaction in that non-Las revenues?

Ram Charan Sesharaman — Chief Financial Officer

So the transaction revenue will be between 25% to 30%, depending on the quarter, lives. That will be the percentage of the non-asset base. The remaining will be call center and we have some license fee that we do. For example, our MMX application, our front office applications and all those things we kind of get some license fee for that. And then there is the OP. So the major part is the transaction risk, which is to be between 25% and 30%.

David Sagawa — IIFL Securities — Analyst

All right. And again, on the non-mutual fund revenue, we see an inch up this quarter, almost 1%, again, what has driven that? And going ahead, what would be your guidance in terms of the contribution from the nonmutual fund business, given that now both AA and NPAs have gone live?

Ram Charan Sesharaman — Chief Financial Officer

That’s right. The nonmutual fund business has kind of grown well in the sequential quarter as well as year-on-year. A, as Anuj just mentioning earlier, is on a good growth rate try. So it has kind of come up almost like 35% year-on-year. And even on a sequential basis, it’s kind of up almost 7%, 8%. So that’s kind of done well across the board. Our camper business, as you saw, new offerings are coming in, they have started kind of some traction on that. They have again improved around 11% quarter-on-quarter.

Similar for our KRA business, insurance depository, during the last quarter, we did see some small uptick in the policy conversions also. So that kind of did go up around 15%, 17%. So we have seen across the board increase in the last quarter in the nonmutual fund business. On the second part of the business — second part of the question that you asked on basically on A and this, I’ll probably let am answer that.

Anuj Kumar — Managing Director

So this like Ram Charan said, nonmutual fund, almost all cylinders were firing AIF, Kamsky, KRA and insurance. Right now, there is, I would say, very marginal negligible contribution from A and NPS. NPLs, like I told you, was the first — the very first completed month of operation. Whatever impact they have, we will see from this quarter, but we are expecting a real impact of that to come any real impact to come in the second half of the year. So that thing hasn’t played out yet. That will play out. It is the other four components, which have contributed to the nonmutual fund revenue — does that answer your question?

Operator

It looks like the participant connection has dropped out. In the meanwhile, we move to our next question. [Operator Instructions] The next question is from the line of Punit Kumar from Reliable Investments.

Punit Kumar — Reliable Investments — Analyst

Mr. Anuj, thanks for excellent presentation that you always do. Number two, the numbers were good. It needs the congratulations. Thank you from all of us. Last, you need to take care of your thought, which doesn’t seem to be in the best possible shape. So Mr. Ansari [Phonetic], you can answer, 2.5% that I’m going to ask.

Number one, if you see this quarter, it is March quarter over last year, it has grown by 21.3%, whereas the December quarter had grown by 25.7%. This is year-on-year. Does that mean that we are flipping? Number two, — there’s a lot of things happening in terms of the parent company pledging some parent company selling what is Deutsche Bank doing into it? We took the loan from which a bank, all those end of confusions are not getting reflected well in the market I think so. And the last question small one is, are we compromising on the auditor name in terms of quality?

Ram Charan Sesharaman — Chief Financial Officer

So Punit, thanks for your comments. I will answer this in part, and then I’ll ask [Indecipherable] take over. See, the release that you saw is a very routine kind of an that can, and I’ll give you the details. Private companies, when they hold an investment hold it in an entity. The owner of that entity is typically their investors or LPs. It is possible to have some loan in that entity, which means you made INR100 investment, INR90 came from the investors, INR10 came from a bank to total the 100 through which the investment is made.

So whatever you are seeing in the filing that you’ve seen is about banker who had lent that INR10 now moving away and Banker B coming in. This is at the investor level. This is not CAM pledging anything or any of the domestic shareholders pledging anything. This is at the level of one level of investor switching that small amount of loan from Banker A to Banker B.

All these loans are backed by pleasures of shares. So we are sure that there is some pledge happening over there. But this is not at company level at all. So that is one thing that we are letting you know. The standard accepted process in the market, as you know, is to declare these events too, which is how you saw the filing. So that’s the answer to your question.

If you want a separate conversation, we have it to have a separate conversation, don’t treat it as anything outside of routine switching of a lender by somebody who borrowed money, that’s all diets. — on the pledge of a standard pledge. I will hand back to Ansarin [Phonetic] to comment upon 3Q and 4Q and [Indecipherable].

Anuj Kumar — Managing Director

So you are right in terms of the growth, what we did year-on-year in Q3 to Q4 is a little lesser. But it also tracks the AUM growth. If you actually saw the AUM growth in Q3 was around 28%, and hence, the revenue growth tracked at year-on-year revenue growth for the current year is again 20% to 20%. Our revenue growth is tracking that.

So it’s a function of the AUM growth that’s happened in the industry in Q3 versus Q4. This is, in fact, if anything, have remained stable or become a little better. So this is not a sign of any depletion in any of our offerings or revenue potential or anything. If you see from a longer-term perspective, our CAGR continues to be hit.

If you actually see the year-end and see the three-year CHR, higher CAGR and 10-year CAGR, the five and 10 years continues to be healthy. The industry continues to be around 19.5%, 20%. And our CAMS revenue continues to grow, in fact, a little higher than our last calculation almost 16%. So this is kind of a longer-term trend that we payout quarter-on-quarter, there could be fluctuations in the asset growth and our revenue since we are 18,9% based on MF asset growth. Our revenue will track that small movement or fluctuations quarter-on-quarter. But this is not a reflection of the long-term any depletion that’s happened in our potential.

Operator

We’ll take our next question from the line of Dipanjan Ghosh from Kotak Securities.

Dipanjan Ghosh — Kotak Securities — Analyst

Just a few questions from my side. So the first one, if you can break up your non-asset in demo revenues.

Operator

Sorry to interrupt. Could you just hold your phone or microphone closer to you. We can’t hear you that well.

Dipanjan Ghosh — Kotak Securities — Analyst

Am I audible now? Sure. So on the first part, I just wanted to understand how much of your non asset-linked revenues during the year was led by higher NFO related volumes that we witnessed in FY 2022

Ram Charan Sesharaman — Chief Financial Officer

So for the year, it’s not a significant percentage, single-digit percentage because the revenue model for NFOs is the applications-based billing. Although there were mega NFOs and there will be some revenue that comes from NFOs, depend on the way we look at it, it’s more kind of a future revenue potential for the NFOs, rather than the one-time revenue that we get by processing the application form. So there will be less than INR510 crores for the year. That’s not going to be significant. The potential that gives us for future revenue is what is more appetizing in that.

Dipanjan Ghosh — Kotak Securities — Analyst

On the second question, sir, now that you have gone live with the proposition and it has kicked off. If you can share some unit economics more on the non-PSP side of the business, in terms of how your revenue model is structured and the margins that you probably intend to make on more of a statistic basis in the business.

Ram Charan Sesharaman — Chief Financial Officer

Okay. See, as you know, there are two components to this. One is the account aggregator under the TSP. So the — yes, we are seeing traction, and we are seeing use cases also evolve. A couple of them regarding their lending use case, as well as a broker onboarding is kind of a little more crystalized now than what it was earlier, but still it’s early days.

See the revenue model for this is a one-time implementation cost where we — especially in the DSP model where we kind of enable the end customers, the SIP and SRU to actually have an encryption and decryption layer and some — over and above that, there is some analytics that we will do for them. That’s the one-time implementation cost that we will charge. And the predominant revenue will come from for [Indecipherable], as well as TSP will be a perp cost.

So in terms of the data that passes through our pipe first to the DSP layer and then the AA and the TS player and to the FIU, — so that actually constitutes one pool, which will be built on by a DSP and one by AA. It’s too early to predict on what the margins will be. What we are sure is that it’s a wide market — it’s a large market, use cases are evolving, and it’s going to be a volume-based market. It’s not going to be a niche market for sure. So the prices are settling down. As you would know, in the initial part of it, there will be some operation on prices. So we are still at a stage where there is some discovery happening on what is the appropriate price. But our models are clear. We think that in the medium and long term, this will be a profitable business for us.

Dipanjan Ghosh — Kotak Securities — Analyst

Sure. Just two more questions from my side. One is on the offshore fund servicing that you started with the Gig City, what are the services you’re providing? And if you can shed some color on your proposition or plans for that business segment going ahead?

Anuj Kumar — Managing Director

Yes, sure. So if you see — I’m sure you’re aware of the GIFT city and how the overall architecture is being promoted largely for domestic deployment, so think of a domestic fund, which is going to invest in domestic asset, but is planning to raise money overseas. The option for fund administration were largely outside India.

The Aveda[Phonetic], which is getting created is with a strong push of the government and the regulators and a lot of that offshore administration covered to India, you know that a lot of that administration sits in Morrison[Phonetic] Singapore, etc. I guess most of the participants on this call belong to the [Indecipherable] and know how that architecture works.

So as that arbitrage plays out, as the, I would say, the incentivization of participants to operate out of India goes up, we will see momentum in new funds filing for permission with Sony[Phonetic] and then taking an office. In fact, I was with one of our domestic clients yesterday, and they just leased space 10 days back because — and applied for commission. I would still not say that there is earth-shattering momentum yet. GIFT City has been around for a few years. The momentum is building up. But with the incentivization, it is possible that a lot of overseas fund raise with deployment of India, that architecture will start playing out in GIFT City and that is the way this market will develop. Like we said, we’ve had about four sign-outs about once a month. We are expecting that our momentum, we should be perhaps getting a signing a week, but there is some time for that to happen.

Dipanjan Ghosh — Kotak Securities — Analyst

Sure. Last question from my side. So firstly, congratulations on a new deal win during the quarter. I just want to understand when you pitch to a new client who has not yet commenced MFS, how do you determine the pricing model? What does the pitch really considered bearing the propositions and service offerings that obviously will be a part of the pitch?

Anuj Kumar — Managing Director

Sure. So today, if you see the RTA service stack is a very, very broad stack. And sometimes I have publicly said that calling ourselves just registrar — [Indecipherable] and condenses the scope that we perform.

So overall, what a consumer looks for and what we pitch is essentially our capability to do recordkeeping, investor servicing, execution of investor trade, payments, settlements, all of that kind of work. The regulatory adherence, the compliance, cybersecurity, ability to deliver good standards and uptime, BCP as an integral part of our overall architecture. Our digital assets, our front office spread.

I think there are 10 to 15 core components that play out. And while I don’t want to take you to any one of these, I’ll just give you an example, that when a new fund out comes in and looks at my TAM and see that there are 50 lakh investors to whom they can potentially pitch, we obviously don’t allow advertising or marketing on my TAM. So it’s just a transaction platform.

We need to make these visible to INR50 lakh consumers. There are no other plays, which can allow you that. Similarly, you can make yourself visible to walk in on 20 branch offices across the country. There is no other place where you can do that easily.

And similarly, our track record of managing fund houses, which have assets or several lakh crores. But on the other hand, also on households, which have only INR20 crore or INR3,000 crores, right? I mean we have the entire spectrum. And the amount of attention can– is able to pay to kind of introduce fines in their overall execution.

Our best-in-class cybersecurity scores, which you’ve seen in many of our presentation decks. Our very, very strong capability in managing business in any of our three centers if there was a geopolitical or any other weather-related crisis in one of the cities. I think — I think consumers look at each one of these components.

But more than that, more than the formal presentations, I think they look at a lot of market feedback, they’ll talk to our consumers, they talk to many other parts of the ecosystem to form a belief in our capabilities. But that’s our business we’ve grown over the last many decades, it’s not an access of today. But like I said, there are 10 to 15 very strong core themes, including a leadership team, a very strong mental[Phonetic] leadership team, which helped to position in front of a new client. That plays out identically in the capital markets, very intense in AMC sales, but also equally intense in AR sales.

Dipanjan Ghosh — Kotak Securities — Analyst

Sure. Thank you for the detailed explanation.

Operator

Our next question is from the line of Sanjay Awatramani from Envision Capital.

Sanjay Awatramani — Envision Capital — Analyst

Sir, can you highlight which can be your core competitors in the market?

Anuj Kumar — Managing Director

So depending upon which product you’re looking for, the competitors change, if I look at the core business, which is the RTA business, there is one large list, you know the name, their competitors. When it comes to a lot of other capabilities, our ability to, for example, offer APIs of all kinds, have websites, transaction portals, etc., built. There are a lot of IT companies who do that kind of work, and they are all competitors.

If you see account aggregator and TSP, if you go to the Saboti [Phonetic] website, you will see about 30 different TSPs, IT companies of all kinds, including a few of the big four in India are PSPs, account aggregators, the four licensed ones. NPSC three-license entities. So depending upon which market segment we are looking at, the answer changes. But if you are restricting yourselves to the core, which is head to head, is there one or two or three RTA competitors over [Indecipherable].

Sanjay Awatramani — Envision Capital — Analyst

Okay. That’s all from my side. Thank you so much.

Operator

We’ll take our next question from the line of Kaushik Agarwal from Haitong Securities.

Kaushik Agarwal — Haitong Securities — Analyst

I hope I am audible.

Anuj Kumar — Managing Director

You are, Kaushik.

Kaushik Agarwal — Haitong Securities — Analyst

Congratulations for the quarter. Sir, I have a few questions. Number one is regarding this press release where you mentioned that CAMSfinserv has collaborated with Microsoft India to develop the AA marketplace. So I just wanted to understand what kind of collaboration is this? And is there any sort of investments which we are going to do in the near future in terms of the — in terms of money or in terms of the manpower for this specific collaboration? Number one. Number two is a data keeping point. I just wanted to know the ESOP number for Q4 FY ’22 and Q4 FY ’21 and for full year FY ’22?

Anuj Kumar — Managing Director

For sure. Very good question. So just as you know, our business is kind of moving away almost to be predominantly technology-oriented business, as a platform business. Within that, account aggregator a new initiative, and we wanted to be sure that we had best-in-class partnerships in the country with entities, which were not just commercially partnering with us, I mean, I can go and buy something from Microsoft and I can call it a partnership. But that is not how this is built. Microsoft, as an India-centric initiative has partnered with the specific market leaders in different segments, let’s say, someone in banking insurance, some account aggregator, etc. With the explicit, I would say, objective of deepening and broadening the market, making specific innovations relevant to that market, helping enhance the product bases their tech capabilities, and then helping with the go-to-market selling will continue remaining our responsibility, but because of their wide breadth and wide reach, they will certainly vitalize the product class and a vitalized CAM. This is not a financial JV.

It is not a financial JV, it’s not a financial partnership. It is not that we are each putting in money to create something. It’s not a foundation, not a chair. It’s a stated partnership between two corporates, which go beyond, I would say, the stated commercial agenda of one being a seller and the other being a buyer. It doesn’t Microsoft interest to do foundational work in the country. Timco has foundational market-making work that they’re doing jointly with camps in the area of account aggregator.

Ram Charan Sesharaman — Chief Financial Officer

I’ll take the question on [Indecipherable]. So for the year, the cost to P&L that we have taken, when you see a salary cost of INR321 crores, that includes INR25.3 crores cost because of ease of it is a non-cash charge. That answers one part of your question. For the quarter, our cost accounted is around INR7.5 crores, which was probably around INR4.8 crores more than what it was in the same quarter last year.

Kaushik Agarwal — Haitong Securities — Analyst

Okay. Okay. Sir, just last question on the margin side. We have seen like on a Q-on-Q basis or due to obvious reason that you mentioned during the initial remarks that there was some investment being made due to which the EBITDA margin has seen like from 45% to about 43.6% during the quarter. What’s your two to three years’ view on the margin trajectory for the company?

Ram Charan Sesharaman — Chief Financial Officer

So our commentary has been consistent on that. What we have been saying is that the normal margin and because of various reasons, including from a yield depletion because of growth in volume to salary increase to our investments that we do in a new business as well as an information security and talent. Our long-term view of the margin has been in a good year. It will be a little more than 40%, and in a year where assets don’t grow, it will be probably between 35% and 40%. We don’t see any reason to revise that guidance as of now in terms of where we think the margins will secular. We’ll have to wait and see regarding the asset growth for the remaining period of the year, and then we’ll probably have to revise any commentary we have on that.

Kaushik Agarwal — Haitong Securities — Analyst

Okay. Okay. Thank you so much, so that’s it from my side.

Operator

Thank you. Our next question is from the line of Jatin Jada from Star Capital. Please go ahead.

Jatin Jada — Star Capital — Analyst

Hello. Greetings. Am I oral?

Ram Charan Sesharaman — Chief Financial Officer

Yes, sir.

Jatin Jada — Star Capital — Analyst

Thank you. First of all, congratulations on good set of numbers. Actually, my question is just a follow-up regarding the margins itself. I just wanted to know if you are planning on margin expansion growth, what steps can be taken in order to improve PAT and EBIT margins?

Ram Charan Sesharaman — Chief Financial Officer

So from a margin perspective, historically, if you see what has been the margin has been within the range of 35% to 40%. In a good year, it has been around 40%. Over the last one year, definitely, you have seen some margin expansion happening. It’s been a combination of the growth in the assets as well as some amount of cost optimization that has happened. The automation that’s happened has benefited to an extent on the cost. But going forward, from a margin perspective, I think our expectation is that to maintain early 40s a margin, will involve a lot of work from our side. It’s not — we’re not looking at a huge margin expansion for reasons that are well documented.

Number one, this volume-based pricing or the lab-based pricing will ensure that going forward, the yield will keep falling down as the assets grow, and that needs to be managed. This is something that we enter into a relationship with our customers on a win-win basis. So that’s something that is not reversible. And you know that India is a wage inflationary [Indecipherable] if you have to be in the market, you have to give them a decent wage hikes. So on a year-on-year basis, you are going to get this 10%, 15% increase in salary cost. And then the investments that we need to make to maintain resilience in terms of information technology services, the huge capex that we are incurring.

Last year was, in fact, the highest year in terms of campespend some INR65 crores only on IT assets and capex, just to ensure that we are geared up for the transaction volume as well as statutory requirements. So these things will keep happening, and there is scope that the RPA will need to do for the same fee will keep creeping up. That’s the nature of the business. Each of the business, any regulatory changes that come. We’ll have to invest on that. We’ll have to invest on the IT infrastructure. So our overall view is that, we will continue to do all these things, continuing to handle price reductions, continue to handle wage inflations and continue to invest in business and new business. And if you retain the same margins level going forward, the early 40s, I think this is one well. That’s been our outlook.

Jatin Jada — Star Capital — Analyst

All right. Thank you so much. That is it. Have a nice take of it.

Ram Charan Sesharaman — Chief Financial Officer

Thank you.

Operator

Thank you. Our next question is from the line of Prasheel Shah from CapGrow Capital. Please go ahead.

Prasheel Shah — CapGrow Capital — Analyst

Yes. My question is regarding the competition. As you rightly mentioned, there are only two players in this market. So how do we differentiate ourselves from the customer — from your competitor, which would be as intent?

Anuj Kumar — Managing Director

So you can see that the MR market is now almost close to 30-year-old market within the sport place, as I explained earlier, consumers and asset managers are looking for a set of trades, a set of capabilities. And I wanted to make a decision basis that the business has become extremely regulated, so the market’s expectation is 100% quality. Small things that go wrong, has the attention of not just consumers, but governing bodies, auditors, boards, trustees, all of them. Gold plating in end results in quality, in complaints, in investor servicing and the courtkeeping, in the way we manage APIs, the way we manage up time of our ID assets, the speed at which we process things.

The capability of the team, the vintage of the team, capability of the digital assets, investors who refer getting serviced digitally on our assets, spread of the front offices. Like I said, our various criteria that asset managers would deploy, of course, we would also look at commercial and price, etc. Over the last 30 years, while both companies have been in the arena, you can look at the clientele, you can look at the head of the market, you can see the winning praecord of large significant logos, large brands, etc. And make up your mind and of course, you are in touch for the marketplace, so I’m sure you’re speaking to a client etc. Differentiation doesn’t get created in a day. Differentiation doesn’t get created in PowerPoint.

Differentiation will not happen because of something that I did yesterday or in the last three months. I think it is just sustained investment, sustained capability, demonstrated results, exceeding expectations across all these macros that I spoke about, which have brought us where we are. So that’s really the answer to the question. I do not want to say that it is some technology edge or to some people edge or do some digital edge. I think it’s a culmination of all of these factors built over decades, the prostate cancer is built as a significant center of the area market participant, which has brought us where we are. That’s really how I would alter question.

Prasheel Shah — CapGrow Capital — Analyst

Okay. And just some months back, maybe looking more than a year. Kotak has invested in capital. So what do you make up that investment? Is there any threat or done over a period of maybe two or three years down the line, sort of moving in tech as their RTA. Do you see that as a threat?

Anuj Kumar — Managing Director

No, we don’t see that as a threat. Our understanding is that the quota Group continues to make strategic investments in entities across the marketplace. This is one of those investments were tightly coupled or tightly tied to a decision to buy RTA services from one entity to the other, between this entity and the other, we will not see that connection. We have not sent anything.

Prasheel Shah — CapGrow Capital — Analyst

And acquiring Zerusa as a client. So after — so could you just walk us through the journey of how acquiring a new client goes? When do you sort of start earning from this partnership?

Ram Charan Sesharaman — Chief Financial Officer

So typically, when an application for an AMC is made, that becomes visible. It’s a small market. So we know who all are participating in the marketplace. A lot of times, potential consumers do reach out to us, or we reach out to them depending upon who makes the phone call first. The process is — it takes time because the newly registered AMCs, in the run-up to getting the license, are supposed to demonstrate that they have capabilities of fund management capabilities of investor servicing and that they are beginning to identify partnerships for all of this. They’re obviously also supposed to have other partnerships in the area of fund administration in the area of custody, etc.

So they begin to start the process much before the license concern, and sometimes coinciding with the license, they are able to carbonate the process in a point all of the revenue only starts post-launch. Typically, everyone will start with the scheme. Most of them will start with an equity scheme. There are track records where AMC have started with a debt or a liquid scheme too. So the first scheme has to come out. It comes out as an NFO, and that is when we start getting the first assets from the first transaction to build. The whole process as the long — I mean, on that average, will take about a year, at least, but that sometimes take even longer.

Prasheel Shah — CapGrow Capital — Analyst

Yes. Just one last question. So what I meant was when does it start adding value in terms — not just in terms of revenue but also in terms of profitability?

Ram Charan Sesharaman — Chief Financial Officer

Okay. So think of it this way. I’ll just give you a metric, and then you can make your own decision. I’m not giving you a specific accounting answer. For any new AMC to be relevant for themselves and for suppliers like us to make money, there has to be a critical mass. And think of that critical mass of being at least INR10,000 crores of AUM because, before that, those are really small numbers at which business is still kind of suboptimal in size for them. And because it is for them, obviously, for the other participants too, it is not yet crossed a critical threshold. So it takes that minimum threshold for it to become profitable in the range of, let’s say, INR00oresto INR1,000 crores. That typically takes time. It will not happen in the first year, but it can happen, let’s say, between the second and third year. If the sales had us strong, AMCs could get to that level. Those are the levels, let’s say, between INR500, INR10,000 crores that the assets begin to make sense commercial side.

Prasheel Shah — CapGrow Capital — Analyst

Thank you.

Operator

Ladies and gentlemen, that was the last question. I now hand the floor back to Mr. Ram Charan for closing comments. Over to you, sir.

Ram Charan Sesharaman — Chief Financial Officer

Thank you. Thanks, everybody, for attending the earnings call of camps. Please feel free to reach out for any further questions to either Orin Kepler IR or Anish Savlani in the e-mail addresses even in our corporate presentation or in the communication that you have received. I look forward to your continued coverage and support. Thanks again for attending.

Operator

Thank you, members, of the management. Ladies and gentlemen, on behalf of Computer Age Management Services Limited, that concludes this conference. For further questions, please reach out to Anish Sawlani from IR team of camps baiting Anish.sawlani@camsonline.com.

[Operator Closing Remarks]