KFin Tech rises 2%, trades near record high as Jefferies foresees 16% upside

Shares of KFin Technologies surged 2 percent to Rs 480 per share on the BSE on October 12 after global brokerage firm Jefferies upgraded its target price on the counter to Rs 560 apiece (versus Rs 500 earlier). The S&P BSE Sensex was down 80-odd points or 0.1 percent to 66,393 levels, as of 9:55 am.

So far this year, the stock of this midcap company soared 35 percent as against 8 percent rise in the Sensex benchmark. Earlier, on October 3, the stock had scaled to its all-time high level of Rs 493 per share.

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KFin Tech provides SaaS based end-to-end transaction management, channel management, compliance solutions, data analytics, and various other digital services to asset managers across segments. The company also outsources services for global players. Out of 46 Indian asset management companies (AMC), KFin Tech services 27.

Analysts at Jefferies, in their note, wrote that KFin Tech is emerging among top leaders in registrar and transfer agent (RTA) services for AMCs and corporate issuers. The company, they added, is evolving into data processing and analytics solution provider, with a higher share of value added services to clients to increase dependency.

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“KFin’s foray into global AMCs and account aggregator segment can expand horizons and lift growth. The strong product proposition and vast experience in offering investor solutions can enable faster ramp up,” the global brokerage firm added.

Furthermore, analysts raised earnings estimate for the company by 1-2 percent, expecting 17 percent compounded annual growth rate (CAGR) in profit over the next three years.

The company’s overseas revenue formed 9 percent of total revenue in fiscal year 2022-23 (FY23). Analysts expect this to grow at 30 percent CAGR over FY23-26, rising to 14 percent of total by FY26.

“KFin also generates high surplus and has been pragmatic with acquisitions. Hence, Kfin may be a higher-growth EM peer for Indian and global platforms like CAMS, SS&C, JTC Group, Vistra, CITCO, CSC and Apex Group,” analysts at Jefferies added.

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