ICICI Securities research report on KFin Technologies
KFin Technologies Limited (KFin) is a leading technology-driven financial services company providing comprehensive services and solutions to the capital market ecosystem. Its clients include asset managers and corporate issuers across multiple asset classes in India and South-East Asia, and is now expanding to other parts of the world. KFin provides critically important services to capital market ecosystems while adopting platform-driven product design and delivery approach to service the clients’ needs. We particularly note the growth potential in the emerging international segment, bolstered by the strategic acquisition of Hexagram’s fund accounting platform, while Indian MF RTA and issuer solutions provide a direct play on the surging Indian domestic capital markets and prospective AUM growth.
Outlook
Initiate with BUY and target price of Rs 450 based on 30x FY25E EPS of Rs15 We expect KFin operating revenues to register a CAGR of 11% between FY23- 25 driven by 1) 9% CAGR growth in domestic MF solutions business. For the domestic MF business, we expect AAUM growth of 12% from FY23-25 and expect yields to decline by 1bp each year from 0.039% in FY23 to 0.037% in FY25E, 2) Issuer solution business is expected see a CAGR of 12% driven by the positive outlook for capital market activity, 3) Other investors solution business is expect to deliver strong 25% CAGR and 4) Other operating revenues is expected to see a CAGR of 10%.
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