KFintech stock up 23% in 6 days post Q1 results; Jefferies retains Buy call

The company gained significant traction in new contract sign ups in the fast-growing business lines of global fund services, alternatives and wealth, fund administration, and technology solutions.

Shares of KFin Technologies (KFintech) hit a new high of Rs 898.75, as they rallied 9 per cent on the BSE in Wednesday’s intra-day trade on the back of three-fold jump in trading volume.

In the past six trading sessions, the stock has zoomed 23 per cent after the company reported a strong performance across segments led by new wins, revenue and profitability growth, and expansion in margins.

In the June quarter (Q1FY25), KFintech’s profit after tax jumped 56.9 per cent year-on-year (YoY) to Rs 68.07 crore, aided by 30.9 per cent broad-based revenue growth at Rs 237.56 crore. The company said international and other investor solutions revenue was up by 56.6 per cent YoY; VAS revenue up by 49.6 per cent YoY.

 

Earnings before interest, taxes, depreciation, and amortization (EBITDA) grew 41.5 per cent at Rs 99.66 crore; margin improved 315 bps to 42.0 per cent from 38.8 per cent in Q1FY24.

The management said the company gained significant traction in new contract sign ups in the fast-growing business lines of global fund services (international), alternatives and wealth solutions, fund administration solutions, and technology solutions.

KFintech is the only investor and issuer solutions provider in India that offers services to asset managers such as mutual funds, alternative investment funds, wealth managers and pension as well as corporate issuers and is one of the three operating central record keeping agencies for the National Pension System in India.

KFintech is the largest investor solutions provider to Indian mutual funds, based on number of asset management companies (AMCs) serviced as on June 30, 2024, and the largest issuer solutions provider based on number of clients serviced as on June 30, 2024.

KFintech is a leading technology driven financial services platform providing comprehensive services and solutions to the capital markets ecosystem to global asset managers in Malaysia, Philippines, Singapore, Hong Kong, Thailand and Canada.

KFintech, with its multi-asset servicing platform, is well positioned to benefit from strong growth across large markets in India.

Compression in domestic mutual fund (MF) yields will be slight drag, but traction in international/alternative investment fund (AIF) segment is encouraging where mgt is also seeking merger & acquisition (M&A) prospects in the west. With good cash levels & strong platform, KFintech can capitalise on M&A opportunities, said analysts at Jefferies. The brokerage firm maintains a ‘Buy’ rating on the stock with a target price of Rs 930 per share.

KFintech is among leaders in registrar and transfer agent (RTA) services for AMCs & corporate issuers. It is gradually evolving into a data processing and analytics solution provider, with a higher share of value added services to clients to increase dependency. Foray into global AMCs & account aggregator segment can expand horizons and lift growth. Strong product proposition and vast experience in offering investor solutions can enable faster ramp up, the brokerage firm said.