Brokerage firms bullish on KFin Technologies: Set INR 1200 Target, Anticipates Robust FY25 Growth

JP Morgan gives INR 1200 Target for KFin Technologies, Highlights Robust FY25 Growth

KFin Technologies, a leading provider of tech-driven financial services, has made a significant impact in FY25 with robust performance across its service lines. Demonstrating its market leadership and strategic prowess, the company posted notable growth figures in the second quarter, reinforcing its standing in both domestic and international markets.

In Q2FY25, KFin Technologies reported a 46 percent year-on-year profit increase, driven by a 34.2 percent rise in revenues. This robust performance translated into a 35.1 percent YoY increase in EBITDA, with the company achieving EBITDA margins of 45.1 percent. These results highlight KFintech's effective operational model and its ability to optimize revenues despite market fluctuations.

The domestic mutual fund services segment saw a 39 percent YoY revenue increase and a corresponding 44.6 percent growth in AUM. The equity AUM surged by 56.2 percent, indicating KFin's expanding dominance in the domestic financial landscape. KFintech recorded a strong 27.5 percent growth in international AUM, coupled with a 44 percent revenue increase in international solutions. The company's focus on global expansion included key client acquisitions, bolstering its footprint.

Notably, KFin Technologies has made strategic moves to solidify its international presence with the incorporation of a subsidiary in Thailand, KFin Technologies (Thailand) Limited, which aims to provide a range of financial services including software solutions and securities registrar services. This expansion is expected to further KFin's reach in the ASEAN region and enhance its service capabilities.

In addition, KFintech’s Services Private Limited, a wholly-owned subsidiary of KFin Technologies, has initiated the process to register as a KYC Registration Agency, KYC User Agency, Authentication User Agency, Authentication Service Agency, and KYC Service Agency with the relevant Indian authorities. This registration will allow KFintech to expand its service offerings beyond mutual funds, opening new avenues for growth and client acquisition in the broader financial services industry.

The management has expressed a clear intent to capitalize on growth opportunities through these strategic initiatives. Analysts from JPMorgan noted that such strategic expansions are expected to contribute positively to revenues in upcoming quarters and further improve EBITDA margins, projected to rise to 46 percent by FY27.

Financial institutions have revised their outlooks based on KFintech's stellar performance. JPMorgan has set a price target of INR 1,200, underpinned by a P/E multiple of 43x, showcasing confidence in KFintech's growth trajectory and sustained earnings potential. Jefferies has also raised its target to INR 1,140, affirming the company's strategic positioning and robust financial metrics.

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