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Shares of KFin Technologies surged 14.4 per cent intraday on Friday to touch a record high of ₹439.70 after advisory firm Jefferies assigned a ‘buy’ rating on the stock pegging rise in the share price at 30 per cent.
The stock later pared some gains to end 11.7 per cent higher at ₹429.25 on the NSE. Jefferies has initiated coverage on the stock with a target price of ₹500, assuming 30 times PE (price per earnings) as of June 2025.
“It enjoys market leadership, and will benefit from financialisation of savings. It is also expanding into global markets, which is a much larger market with negligible outsourcing,” it said in a note, estimating 16 per cent CAGR in profit and healthy cash flows.
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KFin Tech operates as a registrar and transfer to mutual funds (RTA/FA) and provides issuer solutions to listed corporates. In terms of AUM and market capitalisation, it has 31-47 per cent share in these segments, and is expected to gain from increasing financialisation of savings with rising flows to mutual funds and direct-equities.
Slower AUM growth
On the other hand, risks are seen emanating from slower AUM growth, fee compression in domestic AUM, and slower ramp up of international clients. While KFin is the market leader in issuer solutions, in the MF business it faces tough competition from market leader CAMS, which has a market share of 70 per cent by AUM and 40 per cent by clients.
In July 2023, KFin Tech was appointed as the RTA for Jio Financial Services. It gets 85 per cent revenue from domestic operations, growing at 12 per cent CAGR over FY23-26.
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“In the AIF/PMS segment, KFin has built presence with 250 clients and 36 per cent market share, and can benefit from higher AUM growth, better fees and increasing compliance-related work,” the note said, pegging revenue growth at 30 per cent CAGR for three years, with the share in total revenue rising to 13 per cent from nine per cent.
KFin Tech has also acquired stake in an account aggregator platform, and has been pushing into the international market for RTA and fund accounting services. It has 48 clients outside India, including in Malaysia, Singapore and Thailand.
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