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CAMS stock down 27% from 52-week high; is it a good buy?

CAMS stock down 27% from 52-week high; is it a good buy?

CAMS Services shares are down by Rs 857 or 27.31 % from their 52-week high of Rs 3137 hit on November 25, 2021 against the level of Rs 2,280 today

Shares of CAMS were trading flat at Rs 2,302 in the afternoon session against the previous close of Rs 2294.45 on BSE. The stock has gained after two days of fall Shares of CAMS were trading flat at Rs 2,302 in the afternoon session against the previous close of Rs 2294.45 on BSE. The stock has gained after two days of fall

Shares of mutual fund transfer agency Computer Age Management Services (CAMS) have lost 27% from 52-week high amid a roller coaster movement in the broader market. CAMS Services shares are down by Rs 857 or 27.31 % from their 52-week high of Rs 3137 hit on November 25, 2021 against the level of Rs 2,280 today. Currently, the stock is trading in a oversold zone and has high valuation. The relative strength index (RSI) for the firm stood at 28.6. A value below 30 indicates a stock is oversold and a value above 70 signals that the scrip is overbought. The price to equity value of the stock stands at 39.

The CAMS stock does not have comparable peers in the stock market.  However, KFin Technologies which is the largest registrar of India, comes second to CAMS in the industry. Recently, KFin Technologies received Sebi’s nod for its upcoming Rs 2,400 -crore IPO.

Meanwhile, shares of CAMS were trading flat at Rs 2,302 in the afternoon session against the previous close of Rs 2294.45 on BSE. The stock has gained after two days of fall.         

CAMS Services stock is trading lower than the 5-day, 20-day, 50-day, 100-day and 200-day moving averages. CAMS stock has lost 24.57% in a year and fallen 13.67 % in 2022.  In a month, the stock is down 12.58. Market cap of the firm stood at Rs 11,283 crore on BSE.

The earnings performance of the company was flat for the quarter ended September 2022.  CAMS Services reported a profit of Rs 72.14 crore in Q2 against a profit of Rs 72.56 crore for the quarter ended September 2021.

Net sales came at Rs 242.37 crore in the September quarter, rising 6.49% from Rs 227.60 crore in the corresponding quarter of the previous fiscal. Board of the company approved the payment of an interim dividend of Rs 8.50 per equity share.

Here’s a look at what analysts said about the prospects of the stock amid the ongoing correction.

Anand James, Chief Market Strategist, Geojit Financial Services expects a rally in the stock towards 3200.

 “The selling in CAMS had slowed in the last few days, but there are no indications yet to signal an outright reversal in the downtrend that has been persistent since late October. Ideally, the stock should continue the ongoing downtrend, and consolidate inside the 2300-2200. Consolidation in this region, without a break of the lower range, or a direct rise above 2430 could set up a run towards 3200. But such an up move is not expected right away,” said James.

Abhijeet from Tips2trade said, "After the initial euphoria in 2021, expectedly, CAMS stock price is seeing a correction as valuations seemed overstretched for an average financial performance thus far. Technically, investors should buy only if daily close is above 2406 for initial targets of 2490-2580 in the near term." 

Manoj Dalmia, founder and director, Proficient Equities said, “CAMS has been under selling pressure for a long time and now it is undergoing a consolidation phase. Investors can accumulate at current levels, but should not expect any big move. Rs 2650 is a crucial level where it can face resistance. A target of Rs 2923 can be expected in the mid-term if buying takes place.”

Rajesh Sinha, senior research analyst at Bonanza Portfolio is bullish on the stock with a target price of Rs 3400.

"High yielding equity segment AAUM with CAMS is increasing continuously and reached 45.1% in Q2FY23. We expect equity segment AAUM will increase to 50% by FY25. With significant entry barriers, lower MF  penetration in India (16%) compared to the global average (63%) and high switching costs of AMCs from one RTA to another, outlook of CAMS is looking promising. We believe CAMS has a huge potential to grow. So, we maintain a BUY rating on the stock with a target price of Rs 3,400, a potential upside of 44%," said Sinha.

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