As KFin Technologies IPO opened for subscription this week, analysts draw comparisons with its competitor Computer Age Management Services (CAMS), which got listed two years ago. Which of the two stocks is a better bet for short term and long term investors? Both companies share a similar business model: providing services and solutions to AMCs and asset managers. KFin Technologies IPO was subscribed 67% at the end of day 2 of bidding, with one more day to go; CAMS IPO was subscribed 46.99 times the issue size. CAMS shares have gained 78% over the issue price since listing in October 2020. Currently, there is not much demand for KFin Tech shares in the grey market with the GMP fluctuating between Rs -3 and +4.
KFinTech IPO vs CAMS share issue: A side-by-side comparison
CAMS: Rs 2,244.33 crore
KFin Tech: Rs 1,500 crore
CAMS: Rs 1230 per share
KFin Tech: Rs 347-366 per share
Fresh issue vs OFS
CAMS: Entirely OFS
KFin Tech: Entirely OFS
CAMS: NSE Investments
KFin Tech: General Atlantic Singapore Fund
Market Cap (at the time of the issue)
CAMS: Rs 6,713 crore (on listing day)
KFin Tech: Rs 5,815–6,133 crore (implied)
KFinTech or CAMS: Which stock should you invest in?
Since both the companies have similar business models, experts say investors should prefer investing in CAMS instead of subscribing to KFin Tech. “We would prefer investment in CAMS as it has larger market share, better placed financially with high return ratio as well as valuation is attractive for investment,” said Nirvi Ashar, Research Analyst, Religare Broking. KFin Tech experienced a setback in FY21, but is now moving forward, said Rameshver Dongre, Research Analyst – Equity Research, CapitalVia Research, adding, “CAMS has delivered good profit growth over the last five years and also maintained a healthy dividend payout.”
“A good thing is that technically CAMS is overall bullish in trend. It’s near the major support range of Rs 2120-2170 and it attempted to breach support, but demand was observed and price reversed back from the support. For the short term, CAMS is a good stock. Investors can enter if it comes in the support range of 2120-2170 and wait for the targets of 2500 and 2670. KFin Technologies is good only for long term investment,” he said.
Will KFin Tech see a similar listing to CAMS?
CAMS shares listed at a premium of 23.4% over its issue price, at Rs 1,518, and have since risen to Rs 2192 – a 44% gain over the listing price, and a 78% gain over the issue price. “In contrast to KFin Tech, CAMS was listed at a premium price that never fell below its issue price of Rs 1230 and experienced rapid growth,” said Rameshver Dongre, CapitalVia Research. “We believe stock movement either side on listing and post listing would all depend on progress of the company in terms of financials, strong corporate governance and investors’ interest and investment in the company,” stated Nirvi Ashar, Religare Broking.
Was CAMS IPO fairly priced and is KFin Tech’s IPO fairly priced as well?
“When the CAMS IPO was released, the company held a dominant position in its industry, received a strong subscriber response, and was listed on the NSE at a premium price. Comparing inches to inches won’t be simple, but in this case, KFin Tech might not have the same advantage,” stated Rameshver Dongre, CapitalVia Research. “At the time of listing of CAMS IPO, there was no near term competitor and CAMS being a market leader and financially placed well, so investors cheered the IPO. But for KFin, it faces strong competition from CAMS. The valuation is similar to CAMS which we believe is expensive (KFin Tech is trading 40x PE FY22 EPS),” said Nirvi Ashar, Religare Broking.
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