Often when applying for IPOs, you may have come across the name of the IPO registrar. One common name that’s been coming up often amidst the IPO buzz is Kfin Tech. The share price of Kfin Tech is up 2% intra-day today and has gained nearly 10% in last 5 days. Jefferies has maintained ‘Buy’ recommendation with a target price of Rs 1,460 per share. The stock is one of their top midcap picks and may emerge as globally relevant RTA-FA platform.
The global brokerage house pointed out that the 15% upside in the stock over 12 months is based on the business dynamics. They highlighted that the domestic business is doing well and company isn’t facing specific pricing issues.
Jefferies on Kfin Tech: Global foray to help business
According to Jefferies, Kfin Tech is poised well to build a global solution that will help it diversify and expect the company to clock annualised profit growth of nearly 20% on a compounded basis. The global foray is also expected to cut down its dependence on local mutual fund/ corporate solutions. They expect 52x growth in its PE by June, 2027.
Jefferies on Kfin Tech: Synergies with Assent Funds
The management is focused on realising synergies from the recent merger with Assent funds. Going forward, they expect the focus to be on ways to break-in to larger clients in markets like the Middle East, Singapore, Hong Kong, UK & US. Assent sees stronger opportunities in the Middle East, has a strong presence in Singapore and in HK it is making some changes that can aid better ramp-up.
According to the Kfin Tech management, the international business may grow 30-35% over 3-5years on a compounded basis and this will lift share in revenues to 20-25%. The company has achieved break-even and in FY27 it expects this acquisition to be EPS accretive. “In 3-5 years it will bring margins of this business to company level range of 40-45%,” Jefferies added.
Jefferies on Kfin Tech: No pricing pressure in domestic market
The brokerage house highlighted that the domestic businesses including mutual funds, investor solutions as well as value added services are growing well. “FY25 was a stronger year in terms of flows and MTM, but the management reiterated medium term guidance of 15-20% growth in these segments, with value added services growing faster,’ they added.
While the margins on existing business are stronger, the management plans to continue spending 20% revenues into tech related segments. Another factor that Jeffers considers is a big positive is that Kfin Tech is “not facing any specific pricing pressure across mutual funds, corporates and other business segments.”