KFin Technologies, a tech-driven financial services platform, is likely to be a victim of the ongoing volatile condition in the market as experts predict that the stock will debut today with marginal discount on the basis of the lukewarm response the IPO had triggered and the lack of any fresh issuance of shares. Tepid response to initial public offerings, weak listings of the last few IPOs, and being a complete offer-for-sale issue are other key reasons that may impact the KFin listing.
The initial public offering of KFin, the largest investor solutions provider to Indian mutual funds (based on several AMC clients serviced), was subscribed just 2.59 times during December 19-21, led by qualified institutional buyers whose reserved portion was booked 4.17 times.
Retail investors bought 1.36 times the allotted quota, but there was muted response from high networth individuals who bid for 23 percent shares of the portion set aside for them.
KFin raised Rs 1,500 crore from the maiden public issue which was entirely an offer-for-sale by promoter General Atlantic Singapore Fund Pte Ltd. Hence all the money was received by promoter, and the company did not get any money from the offer.
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"Considering lower-than-expected subscription response from all investor categories due to fully priced-in IPO offer and muted grey demand on the back of the issue being purely an offer-for-sale (OFS), providing an exit to promoter General Atlantic Singapore Fund, followed by poor listing by last few IPOs, we expect at par or discounted listing for KFin," Prashanth Tapse, Senior VP Research at Mehta Equities said.
If we look at its financial track record the issue is fully priced-in and discounts all near-term growth prospects hence discounted listing can be possible, he feels.
In the grey market, KFin shares traded at a moderate discount of around 1-odd percent to the final issue price considering the current market volatility and muted response to offer, analysts said.
"KFin Technologies has seen a drop in its grey market price over the last few days, owing to the sour market sentiment. We expect it to list close to offer price and won't be surprised to see a marginal discount also," Manish Chowdhury - Head of Research at Stoxbox said.
Manish finds KFin to be richly valued compared to CAMS.
KFin Technologies provides comprehensive services and solutions to the capital markets ecosystem including asset managers and corporate issuers across asset classes in India. It also provides several investor solutions, including transaction origination and processing for mutual funds and private retirement schemes in Malaysia, Philippines and Hong Kong.
The company with asset-light business model recorded good growth in its financials, as the profit after tax stood at Rs 148.5 crore for FY22 against loss of Rs 64.5 crore, and the revenue in same period jumped to Rs 639.5 crore, from Rs 481.1 crore.
Profit after tax for six months ended September FY23 came in at Rs 85.35 crore on revenue of Rs 348.7 crore.
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