KFin Tech surges 13% after Jefferies initiates ‘buy’

The foreign brokerage sees healthy growth in profit and cash flow for the company.

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Kfin Tech shares were up 13.41 percent, at Rs 436, at 10.37 am on August 25 after Jefferies initiated a ‘buy’ rating on the stock with a target price of Rs 500. The foreign brokerage firm said KFin is a leading player providing services to mutual funds and issuer solutions to listed corporates. “It enjoys market leadership, and will benefit from financialisation of savings,” the brokerage said in a report.

The brokerage firm also said international and alternatives are new growth avenues for Kfin Tech. Jefferies sees healthy growth in profit and cash flow for the company.

K-Fin is aggressively expanding its international presence in RTA and FA services, focusing on markets 2.5 times the size of India. With 48 clients abroad, recent wins in Malaysia, Singapore, and Thailand’s top-5 bank for fund admin, K-Fin is poised for growth. In AIF/PMS, they serve around 250 clients, anticipating 30% CAGR in revenues. Their segment share should increase from 9% to 13% in 3 years due to AUM growth, higher fees, and compliance work.

Jefferies said that KFin Tech is currently trading 29 times its FY24 PE estimates, which is at discount to its peers like Camsonline.

The financials

The company’s net profit fell 10 percent year-on-year (YoY) to Rs 43 crore in the April-June quarter. Revenue for the company increased 7 percent YoY to Rs 182 crore in the same period.

Kfin Tech was listed on the exchanges on December 29, 2022 at a price slightly higher than its issue price of Rs 366. The stock opened at Rs 367.

Kfin Tech provides services and solutions to asset managers and corporate issuers across asset classes in India.

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