Comments
Target: ₹525
CMP: ₹443.25
We initiate coverage on KFin Technologies Ltd with a BUY; and value the company at 30x FY26ii EPS with target price of ₹525.
We like company’s diversified revenue model which lowers earnings concentration risk and offers higher growth optionality. It would benefit from the financialisation of savings trend in India given its leading position in multiple financial asset servicing; as well as is likely to deliver a stronger growth in the international business given potential for market share gains.
We estimate its earnings to grow at 15 per cent pa over FY23-26, however given high PAT-to-FCF conversion (about 100 per cent), robust core ROEs (35-40 per cent) and strong growth optionality in newer businesses the stock warrants premium valuations.
Our target multiple for Kfintech is at a 15 per cent discount to CAMS (similar earnings growth with dominant position), however valuation discount can narrow if Kfintech surprises on growth.
Given Kfintech presence across financial assets i.e. MF, direct equity, alternatives, pensions, etc. – we see it as a key beneficiary of the financialisation of household (HH) savings trend in India.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.