Target: ₹1,050
CMP: ₹902.35
We have liked KFIN Technologies (KFIN) for its business growth potential based on its core Indian MF RTA operations, alongside likely traction in international business (buoyed by acquisitions/partnerships), alternatives, and corporate registry. New wins, organic and inorganic product suites across fund accounting, transfer agency and new segments such as wealth management have helped KFIN achieve continued client wins.
Earnings may moderate owing to: Periodic cuts in yields, mostly following notable growth in client AUMs as seen in FY25; and cost inflation, which is being managed through automation and efficiency. Diversification and continuous investment in technology remain two strategic pillars to optimise growth and profitability.
The investment thesis remains: Continued strong growth in Indian MF, also aided by steps like new asset class launch by SEBI; strong outlook in corporate issuer business; and high growth potential in existing international and AIF business. Partnership with Blackrock’s Aladdin provider network and recent acquisition of Ascent are available growth levers.
We value KFIN basis a 35x multiple (earlier 38x) on FY28E EPS of 30 and arrive at TP of ₹1,050 (earlier ₹1,180). The lower multiple factors in full consolidation of Ascent’s financials, even though it currently owns only 51 per cent and plans to own about 67 per cent by FY28E.
Key risks include cut in MF yields with size.