Ladies and gentlemen, good day and welcome to Computer Age Management Services Q3 FY26 Earnings Conference Call. As a reminder, all participants' lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nikunj Seth. Thank you, and over to you, sir.
Thank you, Hina. Good morning, everyone. Welcome to Q3 and nine months FY26 earnings conference call of Computer Age Management Services Limited. From the management, today we have with us Mr. Anuj Kumar, MD and CEO, Mr. Ramcharan Sesharaman, CFO, and Mr. Anish Sawlani, Head Investor Relations. Before we proceed to the opening remarks, I would like to give a small disclaimer that this conference may contain certain forward-looking statements about the company, which are based on beliefs, opinions, and expectations of the company as of date. These statements are not guarantees of future performance and involve risks and uncertainties, which are difficult to predict. A detailed disclaimer has been published in the investor presentation. Now, I would hand over the conference to Mr. Anuj Kumar. Thank you, and over to you, sir.
Okay. Good morning, everyone. Thank you, Nikunj. I welcome all the participants to this 3Q earnings call of CAMS. Sticking to our usual format, we will go through parts of the deck, and we'll do that in about 20 minutes to have enough time to take your questions. As you would have seen yesterday when we published the results, it's been a very solid quarter for CAMS. And why do I say that? You know that exactly a year back in January of 2025, we had spoken about the price reset. That price reset came in four Q of last year and one Q of this year. So the comparison, the year-on-year comparison is still with a large base. This is perhaps the last quarter in which we will have a comparison to the larger base, while the current year's revenue has taken the price adjustment.
But in that context, this was a remarkable quarter. Our enterprise revenue grew 5.5% year-on-year. And like I said, the year-on-year number for another quarter will not look like it's a double-digit number. It'll continue looking single-digit. The Q&Q revenue growth was 3.6%, which was a very solid growth. Non-MF on a quarter-to-quarter basis over last year grew over 24%. You know that our stated endeavor has been to grow this over 20%. So this was a strong quarter. Absolute EBITDA, rupee EBITDA climbed to the highest ever. Now, you will recollect that the highest ever absolute EBITDA was in the range of INR 173 crore in 3Q of last year. So exactly a year after that, we are at INR 179 crore. Do keep in mind that this takes into account the Labour Code adjustment, largely gradually related.
Some of the other notifications A will not be so impactful and B will be done when they're announced. But that cost of about 1.5-3 crores has been absorbed in the base. So the absolute rupee EBITDA is remarkable. What is also remarkable is that percentage profit after the Labour Code adjustment, every other growth cost that we have incurred is now at 46%. You will remember that this was 43 and some change about three quarters back. So in these three quarters, one Q of this year, two Q of this year, and three Q, it's climbed back from about 43 and a half to 46, which I think is a remarkable vindication of the overall productivity drive and efficiency that we've been able to build into the system. Specifically on MF, our AUM crossed 55 lakh crore.
The market share number remains intact at 68%. The year-on-year growth was 18%. Now, in most years, you know that AUM growth was about 20% if you take the last 10-year CAGR. And that 20% used to be composed of about 12%-13% mark-to-market gains, about 7%-8% net sales. This 18% number has happened despite the fact that mark-to-market gains are lower. So that just is a good indication of the resilience of the system and of the faith that the common investor has in the delivery made by the mutual fund industry. Within this, equity assets, a very, very handsome number, crossed 30 lakh crore for us. Market share, which about five years back, this number used to be about 60%. You've been watching this number so awhile. It's crept up to 66.4%.
One, largely in response to the expansion of equity as an asset class within the overall MF assets. But you cannot deny the share gain part of it. The 60-66 is exactly a share gain. And like the chart says, 70 basis points up year-on-year. Equity net sales at INR 84,000 crore. Although you know that in a great quarter, this number is almost like INR 1.25-1.5 lakh crore. To that extent, a slightly smaller number. But what I'm very happy about is the market share of 71%, which is almost a percent up compared year-on-year. This is the most intensely operative from an operations perspective and the most remunerative part of our entire AUMX. New SIP registrations, which have been in the range of 1.2-1.3 crore every quarter, stood at 1.6 crore, grew 18%, significantly ahead of industry growth.
And I think just the fact that some of the new AMC launches, as well as the CAMS base clientele, has performed very well in this area. SIP collections grew to almost INR 18,000-19,000 crore a month. So INR 55,000-56,000 crore in the quarter. Again, a handsome number, growing 20% year-on-year. And this again is great vindication of the attitude of the Indian investor and his faith in the industry. Live SIPs as a count expanded 8% year-on-year to 65.2% market share. Unique investors, you can see, grew ahead of industry. Carnelian Asset Management came in as a new AMC client. AIF is beginning to become a very popular, well, it's too early for me to say very popular, but I would say an interesting product class where a lot of AMCs want to participate.
As of today, we have SBI, Tata, both launched in the past quarter gone by, and then in the month of January, we've had ICICI, Bandhan launch, but you will see a lot more launches, and I think this is net accretive to the stack of the AMCs because this was supposed to bring in money from a little more risk-taking investor class, an investor class which was doing F&O and day trading kind of stuff for them to come into this asset class. It's a broader product offering, so it's great news for us. We already INR 2,400 crore and with four AMCs live. GIFT City Retail Fund launches. Tata MF launched the first retail inbound fund. This was live. PPFAS and DSP had launched the outbound funds. This interest, we believe, will continue to grow over a period of time. Early days yet.
But the interest of the domestic investor in participating in overseas offerings and the interest of the overseas investors to find a reasonable way to come in through GIFT City, I think they will be the two props on which this entire offering will be built. So very happy that during the year, as we have said earlier, we took six AMCs live. We took a couple of AIFs live. We expanded the GIFT City offering. And we did many other things. I'll just come to that. But from an activity and milestone perspective, a fairly productive quarter. And from a financial result perspective, a very solid quarter. Move to the next. On the non-MF side, the revenue contribution has expanded to 14.5%. We had said almost about nine months back that we were in the process of a business transfer of the KRA business of NSE into CAMS.
This process got concluded. Now the business is with CAMS live with us. Great integration adds more than a million accounts to our overall kitty and uniquely positions us as the second largest KRA. The gap between the second and third, therefore, has widened. CAMS KRA, you know that the account opening momentum in capital markets has been slow. While in mutual funds, the full account expansion remains intact. But in the broader capital markets, the depository and broking account momentum has been slower. Despite that, CAMS KRA grew revenue both on a year-to-year basis for the quarter as well as in sequential quarters. CAMSPay was a great performer. I think if you look at just their base business, a 24% for the quarter over the past year.
If you add to this the PG business, which is just about a year in the making, that added the balanced part of the growth, so it's good to see a new product gain acceptance faster than what you normally see. So that 59% is a sum of A and B. A is the base business, which grew 24%. The balance is the PG business. Alternatives grew 16% in revenue year-on-year. AUM now exceeds 3 lakh crore, the 50% of the outsourced market. That milestone remains intact. I certainly want to call out that while WealthServ, the digital onboarding platform, is not a large revenue accretive revenue momentum business, but it's a very good client hook for us. 250 mandates, almost 200 plus live, and we will continue.
It's our vision to scale up to 500 and even beyond if the market has the ability to absorb all of that. CAMSRep grew revenue in the third quarter 15%. You can see the numbers. We crossed overall one crore eIAs, about 1.3 crore policies, market share at 40%. Again, I would say that the true momentum of this business, the true impact of what Bima Central can do, the true impact of demat and insurance, we are still scratching the surface. LIC, which had agreed to come into demating of new insurance policies, that was declared in March, April last year. They're nearly live. They've commenced. But I think the true momentum of that and the rest of the market expanding their acceptance is a slow process but will happen. I think we are very, very hopeful of continuing to scale these things.
Bima Central, as a unique offering for managing your insurance portfolio, has continued to get awarded, recognized in multiple forums. You've seen some of that in our website. You've seen some of that in the various press conferences, releases, our LinkedIn posts, etc. So very happy that from a product development culture, that the movement that we started almost five, six years back to deeply build a product and a tinkering culture inside the company to have multiple offerings. Obviously, we don't want a dozen because we can't focus on a dozen. But to have maybe four or five core offerings which will drive growth, I think this is a nice pointer towards the future. On the DPDP Act implementation, where there are various components of what a good offering should look like. But from a consenting perspective, I think 360 has launched Consent Pro.
You would have seen some PR on this. And we're expecting this to be a revenue business in the coming quarters. So like I said, overall, coming out of whatever happened during the year, a slow year for capital markets, some backdrop of price readjustment, some backdrop of slowing down of capital market, new accounts, all things, etc. In the light of all that, I think both from a growth and efficiency margin and revenue growth perspective, a very solid quarter. I will pause here and hand over to Ramcharan. And then we will come back to the Q&A then.
Thank you, Anuj. I'll just summarize the numbers in a few minutes. As Anuj said, it was a very solid quarter. In terms of AUM, quarter on quarter, the AUM grew around 5.3%. And as we had kind of indicated and guided over the earlier quarters, the yield impact of the one-time reset, the tail impact, was there in last quarter. And this quarter, we said that we lean back to the original equation in terms of asset-to-asset fee growth.
Happy to say that the asset-based revenues also grew around 3.8% quarter on quarter, which is kind of almost back to the same kind of equation that we are used to in the past. Yields' depletion also was much better than what was guided. It was less than 1.5% quarter on quarter. So from that perspective, we are back to steady state from a yield perspective, which was the bigger concern over the last nine months because of the yield reset. So overall, the revenue grew around 3.6% quarter on quarter and 5.5% year-on-year.
The MF revenue grew on the back of the asset growth as well as the stable yields to 3.3% quarter on quarter, and the non-mutual fund revenue, which was almost 5% quarter on quarter and 24-plus%, almost 25% year-on-year. As you recollect that we generally have a target of growing more than 20% in the non-mutual fund revenue, so barring the first quarter where there was a little subdued, we have kind of reached this number, and confident that going forward, this 20-plus% of non-mutual fund business will happen. This is on the back of a great business growth in CAMSPay and their card offerings, but across the board, there has been increase in the businesses. AIF has increased. Rep has increased, and so has KRA even in a tough market, so the non-mutual fund back on track. Mutual fund yields absolutely back on track.
From a profit perspective, we posted strong earnings. Our EBITDA, which was, as you may recollect, went up to 43% a few quarters back, came to 44%. Now we're at 46%. And that is kind of almost a 140 basis points increase on a quarter-on-quarter basis. So we are again firmly back on the track of what we have said in terms of margins, 45% plus. And we continue to have a good cost control backed by automation and productivity increases, which is keeping the cost line increase subdued. We had indicated at the beginning of the year that if we are increasing cost by less than 11%, I think that's the target. And we are well on target to have the cost increase to be 10% on a year-on-year basis.
On the back of good cost control, stable yields, good growth in non-mutual fund businesses, we have posted strong earnings for the quarter at 46%. This, again, as Anuj said, I would like to reiterate that as required under our institute guidelines, we have taken a one-time charge of the Labour Code revamp, which was around INR 3 crores, INR 2.8 crores as a past service cost in our P&L. In spite of that, we are able to post very strong numbers on a quarterly basis. The board has declared a dividend of INR 3.5. We're keeping up with our dividend declaration policy of 65% of profits being distributed. Our return on capital impact continues to be very impressive at close to 40%. There is some amount of decline in the non-asset-based revenue you would have seen on a year-on-year basis.
But as we continue to indicate, the non-asset-based revenue is not easily driven by transactions or in AUM growth. There are four or five components to it. One of the major components of that is out-of-pocket expenses. And also, there is a component of the new NFO fees. And this quarter, when compared to the last year, there was a decline in the NFO launches when compared to last quarter. And there was also a decline in the out-of-pocket expenses. The out-of-pocket expenses is a revenue line item and a cost line item. So it is not profit accretive. And hence, the decline in the non-asset-based revenue does not impact the profitability. So this is a broad summary of what we've seen from a revenue and a cost perspective and EBITDA margins. I now hand it over to the moderator, and we can open it for Q&A.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Supratim Datta from Jefferies. Please go ahead.
Thanks for the opportunity. I have three sets of questions. Firstly, I wanted to understand, would this loss of five basis points 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 are the margins in the non-MF business currently 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 their smaller scale, I 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 three questions. Thank you.
For sure. Thanks, Supratim. So I'll try to take this in order. On the AM fees and their TERs, sorry, I'm just continuing to hear the interference.
Supratim, you may want to go on mute. There is a bit of background at your end.
Yes, Supratim. Maybe there is a distance from your end.
Okay. All right. Yeah, this is a lot better. 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 AM fee. There are some benefits. There are many percent takes, but I think there are some benefits on the GST side. 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 basis points at the largest, coming to maybe 190, 200 basis points for the smaller AMCs, this will be a small reset to make. Now, will they come to us for any conversation, etc.? We don't have any indication right now that all of that will happen. We've always stated that the amount 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, 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 said in the past, the impact could be I mean, the boundaries of the impact could be 20-25 crores overall for CAMS, but we will wait and see. I don't want to jump into conjecturing on numbers and making estimates till 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 CAMS Rep are two great examples of purely platform businesses. They have the ability to make EBITDA in the 30%-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, INR 12-15 crore rupees of revenue line for these businesses to absorb costs. They all have a component of fixed cost. So some of them are loss-making, which still are not at break-even. Insurance is near break-even but not at break-even. 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%-50% EBITDA easily. That will come after maybe five, six, seven years. But in the next couple of years, it's our attempt to drive this to about 25%-30% EBITDA. We believe that is possible.
This business now has a base of about 230-240 crore. It's growing at the rate of about 40-50 crore a year. And I think the objective of 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 two great examples. Payment is also a very, very relevant example of a platform business. So we are very hopeful of driving that internal target to drive them to 25%-30% EBITDA. The third part of your question was that in CAMSPay, what's happening? What is the growth trajectory? As you know, from a portfolio perspective, we've stated that non-MF should grow 20% plus. Within that, you will remember that we had two breakaway years when KRA grew very fast.
They almost doubled themselves in three years. There was a time when AIF grew very fast. And I think in the last two years, we've seen CAMSPay grow very fast, which means CAMSPay used to be under 30 crore business two years back. They scaled from about 30 to 50, 50 to close to 70 this year. We see them growing from 70 to 100 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 what 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 four to five years, we are sure the way things are going that this non-MF will be at least INR 500 crore book for us in about five years if it continues to grow INR 40-50 crore a year and at that level, at about the 30% EBITDA, it should be a, let's say, INR 125-150 crore 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. If there's any follow-on, you can let us know.
Yeah. Just one thing. On the non-MF business, what is the current margin run rate? And on the CAMS piece, I just wanted to understand what is the mix of non-MF clients and MF clients? Thank you. That's about it. Thank you.
The current margins, we've seen some improvements happening over the quarters. A few years back, we were sub 10%. The current quarter, they are upwards of 13% 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 profits. But all put together, they are kind of at a 13-plus% EBITDA for the quarter. In terms of CAMSPay, earlier, it was entirely dependent on mutual funds. And now, the dependence on mutual fund revenue is less than 50% of the overall.
Thank you. Thank you.
Thank you. A reminder, anyone who wishes to ask a question may press star and one on their touch-tone telephone. The next question comes from the line of Devesh Agarwal from IIFL Capital. Please go ahead.
Good morning, everyone. And thank you for the opportunity. 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, hi. So as we have indicated in the past, there are no major AMCs that are coming up for the renewal in the upcoming financial year. There are a few mid-sized AMCs who will come, which are kind of due in the part of the year. But there are no major AMCs in the top five who are coming up for renewal in the current financial year. And that's why in the six-months map we indicated, they're looking at a broadly stable yield regime for the next 18 months. So every year, there will be some AMCs that come for. None of them are going to be the bigger AMCs that we had a renegotiation just a year or two back.
Right, sir. And so, secondly, you recently won the mandate for Carnelian Mutual Fund. Could you just talk about how the competitive intensity is around basically for 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 2024, most of the mandates came to us. After that, I think we've made it very clear to the marketplace that we are selling value. We are selling premium value. A large part of the market, which is inclined to 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 are bids where price is perhaps the 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 the 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 six asset managers live, 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.
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 endeavor. And that is the way we will continue going. Right, Anuj. And what is the target for this year? How many AMCs are we looking to take live? We now have four, which are won yet not live. So those four have to go live in financial year 2026. I'm not counting the wins of 2026. Typically, it takes sometimes six to seven months at least, and sometimes it takes about a year.
So, I think the four, which we are carrying forward from the last year into this year, and maybe the two or three which we might win from now to June. So, I will not be surprised if we take another five-to-six live this year. And any particular drag that you see on margins because of these 10-12 AMCs which have gone live last year and this year combined for FY27 margins? Actually, I will just talk about a few metrics, which we haven't really positioned yet because till 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 remained flat in calendar 2025, which means the headcount we entered with and the headcount we are exiting with is exactly the same. This is despite a 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 these six 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 are product 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 AUMs 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 RTA operations, any update on that? Where are we in that journey?
So on that journey, there are very exciting developments overall. I just spent two minutes on those. On the form data entry part, which is the AI-based data extraction, I think we've done very well. 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. You will see that happen completely in January-February-March.
On the compliance implementation, you would have seen the press releases, etc., on CAMSLens, where we have taken a lot of the compliance payload. Compliance payload is basically reading of circulars and documents issued by regulators, interpreting them, converting them into quizzes and tests, into FAQs, etc. That product is completely ready. We announced this sometime in November. It's being used internally. We'll open it up for the marketplace. Again, this is built as a small language model on top of an existing LLM. 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 AlloyDB 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 done in the past ever. And re-architecting 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.
Right, sir. Perfect. Thank you so much. And all the very best.
Thank you.
Thank you. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. The next question comes from the lin e of Dipanjan Ghosh from Citi. Please go ahead.
Hi, sir. Good morning. 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 the start of the call, you mentioned some number around INR 20-25 crore, possible impact due to the mutual fund circular. Firstly, did I understand it correctly? Second, how do you arrive at this number? If you can kind of add some color on that. The third question is on the payments business. Obviously, I mean, that has been going 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. I'll take your questions in order. On the KRA business, you have seen that there's been a din in the market. Not a real din, but maybe a partial din that onboarding costs are high in the industry. Now, for specific use cases and instances like the Choti SIP, etc., we had made sure that we offered to the industry because we eat off the same plate. We will never be predatory pricing technique people. We had offered a 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 from a regulatory 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, etc., very, very friendly rates already exist.
So will this conversation, 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 that depends upon what TER you charge and what is the percentage split between your management fee and your expenses, but for some, the GST advantages offset the de-accretion part, and for some, the exit load offsets the GST advantage.
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, product development perspective. Like I said, just taking SIS 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, clinical number. We will see what happens. We are watching the situation closely. Thirdly, on the PAPG part, I think what you've asked is a very relevant question. Like I said, we had two or three years of breakaway KRA revenue growth.
We've had sustained AIF growth, and we've had about three years of breakaway PAPG 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 INR 10,000 crore or more. Are assets 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 while we stack in terms of offering solutions 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 have 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 INR 90-INR 100 crore next year and maybe about INR 120 crore 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 there, so we want to buy in the area of payments. Still, we believe that this will align to the 30% or more EBITDA margins that we aspire to achieve from it.
Right. So 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 two, three, five-year contract?
Oh, annual basis is not something that happens. It's generally three, Dipanjan, sometimes two and a half, two 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 three-year period. Annual generally doesn't happen.
Got it. Thank you and all the best.
Thank you. A reminder, anyone who wishes to ask a question may press star and one on their touch-tone telephone. The next question comes from the line of Abhijit from Kotak Securities. Please go ahead.
Hi. Good morning, everyone. My first question was on the revenue growth visibility on the 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. Just wanted to double-click on that first. The second question was that the comment on cloud 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, Abhijit. On the non-mutual fund growth, there's two parts to it. Yes, the target is at 25% growth. I don't think we are 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 20%.
But realistically, I think given that 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 a one-year time frame from now where you should look at between 20% and 25%. On the cloud implementation, I think Anuj will.
So Abhijit, 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, record-keeping 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 a 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 in the P&L. So we are building it now. I'll just give you an example.
300 crore emails are sent by us every year, a crore a day. Each email is an artifact which can be disputed, which does get disputed by intermediaries, customers, all kinds of people. And therefore, I reconcile 300 crore emails every year. And that's just like a % of a % 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 labor doing all of that. As we build a new platform on technology, which is developed in the last three, four, five years by some of the strongest names globally, a lot of these processes will become very, very efficient, instant, non-batch, which means I will not accumulate one lakh units to start the work.
I can work instantly through APIs, etc. So we expect a lot of efficiency to accrue to the base, and when I said that despite all the expansion that has happened, 1st 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 farther, 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 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 one and a half years ago in June, July of 2024. 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 three 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.
Thank you, Anuj. Thank you, Ram. Very good.
Thank you. The next question comes from the line of Sanketh from Avendus Spark. Please go ahead.
Yeah. Thanks for the opportunity. So I had one simple question. The delta improvement in the margins what we saw in quarter-on-quarter basis is predominantly driven by the non-MF business? Or if you can give the delta change, how much it contributed from the new businesses and maybe MF investments?
So Sanketh, the delta actually is predominantly 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 basis points increase in margins. I think that level of margin gap 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 at all in spite of the Labour Code charge. I think quarter-on-quarter, my manpower cost is stable, is static. In fact, there's no increase at all. There's minor decrease. 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% for the non-MF part. Say maybe given it has improved by 300 basis points on 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 two in that sense, given a couple of businesses are pure platforms?
So the 10% reference rate was not last year. It was probably two and a half, three 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 basis points only. It's not 300 basis points in terms of non-mutual fund business. But just 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 this in terms of every year.
For us to get to, in three years' time, to a consolidated 20% EBITDA is, I think, the base. We should be something more than that, but at least to get there within the next three years, which means that as we keep adding revenue, the increase in margins will be significant. We hope to get to this 20% EBITDA margin within the next three years for the non-mutual fund. Okay. Okay. So basically, a 700 basis point improvement in the non-MF business in a three-year period is possible from the current level?
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 new platform, some led by past innovations in technology in 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 four-, five-year journey from now where you will continue seeing these efficiencies play out.
So Anuj, is it fair to say that with no significant headcount 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 full years. We have stated in public that we've taken the six clients and the AIFs live. The net headcount is flat to lower, like Ram said. Those are the real figures.
So in simple words, then with no people addition, is it fair to say that a pure MF business, not considering the non-MF business, there is a scope? Assuming yield pressure doesn't come because of the TER or something of that kind, then is it fair to say that this productivity gain itself can expand your margins by maybe another 100-200 basis points in a couple of years?
So I'd just like to see a couple of points there. One is that while there is no headcount increase, there will be a remuneration increase, which is your increments and the annual increments will happen. So it's not as if the labor 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 employees. In a good year, it's probably more than 10%. In 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 investments that we'll continue to make and the hiring we'll continue to do for the platform, to expect the 100 basis points creep up in margins over the next year or two 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 now.
Understood. This is very clear. Thanks for the answers.
Thank you. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. The next question comes from the line of Sucrit Deep Patil from Insight Fintrade Private Limited. Please go ahead.
Good morning to the team. I have two questions. My first question to Mr. Anuj is, as CAMS expands beyond its core mutual fund service into insurance, fintech, and digital platforms, how do you see the revenue mix evolving over the next two to three years? And what strategic priorities, whether in technology innovation, partnerships, or customer engagement, will be most critical to ensure CAMS maintains the backbone of India's financial ecosystem? That's my first question. I'll ask the second question after this. Thank you.
So again, the only thing I will point your attention to is that consistently over the past six years since we started facing the market, there's been no change in position on any of the things you've asked, and that covers most topics. We don't want to be an over-diversified 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 INR 150-INR 200 crore every year in the next three years, we will be a INR 2,000 crore company soon. That's in three years or two and a half years. At that time, 20% of non-MF is INR 400 crore. 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 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 investments. None of this is lip service. None of this is showing you the mugshots 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.
If I include the IIMs and the NIITs and some of the tier-one institutes, this number will be about 150, which we acquired in the last two and a half years, three years to build out the platform, be part of operations, be part of product, etc. That remains. We will not become over-diversified. We will not make acquisitions just to make the top line look nicer. Our stated commitment to the domestic market, and despite all the temptations, 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 should come from MFs and related market segments. We will remain there.
Now, the balance part, when it becomes 400 or 500 crore, needs his own attention. For insurance companies, for example, we relate with the regulators and the top insurance companies. Same for payments. Those two 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, etc., increases. For every product class, therefore, I think the dynamics are different. Mutual fund is a concentrated business. The rest of them don't have concentration. They are splintered businesses. And therefore, cost of sales will be high. Cost of product can be high where we are competing with the fintechs and the startups, 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 the strategy which plays well to the market to gain acceptance, to be the number one or number two player in every segment we are in. And today, you will see that at 68% market share, we are the number one player in MF RTA. At 50% market share, we are the number one player in alternative outsourcing. At 40% market share, we are either number one or number two in insurance repository. At close to 20%, we are the number two 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 kind of firing on all cylinders, and we have three other businesses which are firing on all cylinders. You don't have companies which have six or seven leadership businesses. Very tough to get there. The rules of concentration apply to all of us, right? You can't be an athlete doing three sports. So we are cognizant of that, but that perhaps answers your question. Anything else that you need, maybe we can have a separate hour.
Fair enough. My second question is to Mr. Ramcharan. With CAMS consistently delivering strong margins, how are you planning to sustain profitability while funding growth in your businesses? Looking ahead, what is your framework for balancing operating leverage, discipline, capital allocation, and digital cost efficiency to drive ROE and long-term sustainability? Thank you.
Sure. As you know, the business that we operate in offers some amount of operating leverage to us. Well, there is, as I already put in place, right? So from a margin perspective, there is always the pressure that you hit on the employee cost. There is a yield pressure 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, etc. So it's a constant kind of push and pull in place between both, and we have managed to get a balance between the two and have seen that in the post-listing, we've been able to increase our margins by 100 basis points a year at least.
And now that we are at a steady state of between 45% and 46%, at any point of this journey, we've never optimized on our investments in technology. We have investments in non-mutual fund businesses. We have 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 as such. Even in quarters where the margins were 42%, 43%, we did not optimize on investments. We continue to build the products.
We have released several products in terms of AIF, the WealthServ, account aggregator product, the pension product, and even the several enhancements that happened from a mutual fund perspective. So I think the future is secured from that perspective. We've invested for the future. We invested on technology. We have created 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.
Thank you for the guidance, and I wish the entire team best of luck for the next quarter. Thank you.
Thank you. The next question comes from the line of Prayesh from Motilal Oswal. Please go ahead.
Yeah. Hi, hi everyone out there. And good set of numbers. Anuj, 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 pipeline, 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 you throw some light there? Because I think in the past few years, there has been a high 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 two kinds of people who wanted to get into mutual funds. There were the broking companies, and there were the PMS and AIF players. It continues to remain in those two boxes. Most of the new applicants are in either the first or the second box. Despite the increased net worth requirements, etc., 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've 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 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 one year, for example, we took six AMCs live. Some of the new AMCs which we took live in FY23, FY24 will head towards the 10,000 crore 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, six of them went live last year. Four were new domestic logos. One was a domestic transition. One was a Sri Lankan logo. That leaves four, one logos to be taken live in 2026, which will be taken live by us, definitely within 2026, I think. So the new wins which happen from now up to June will also be eligible to go live in 2026. So I think it'll be about five to six 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 it. And secondly, on this structural bit, do you think that the RTA industry at any point in future, say like next three, four 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 for transaction has been dipping every year for the last eight or nine years.
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 implement 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. 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 crore SIPs in a quarter. 10 or 11 years back, this number used to be less than one-tenth, right? No matter. Revenue has now grown 10 times. I could have charged cost per SIP registration, and we would have been a richer company. But all of that is meant for other people. I think we're 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, are underway right now.
Got it. 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 labor law that the impact has yet to be taken or anything on that sort?
So, Prayesh, so as you know, that labor 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 1st. There are four broad limbs to which people are talking about: a gratuity impact, a possible ESI impact, a possible provident fund impact, and a possible leave encashment 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 evaluation, and hence, I think going forward from a labor cost 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 FY25, we had seen a very sharp jump from about INR 11 crores to about INR 16 crores revenue. Because CAMSPay is a part of insurance as well, we should expect something similar. Is that the right way to think about seasonality in CAMS share?
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 also. 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.
Got that. Thank you so much, and wish you all the best.
Thank you. We'll take this as our last question for today. I now hand the conference over to Mr. Ramcharan for closing comments.
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, and we'll be happy to take your meetings and questions. Thank you.
On behalf of CAMS, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.