Jefferies sees 26% upside potential in KFin Technologies shares and maintains ‘Buy’ rating with a target price of Rs 570 following the strong second quarter performance of the company. KFin Tech posted a 28% growth in its profit after tax (PAT) at Rs 61.4 crore for the second-quarter of FY24. “We see 18% Cagr in profit for K-Fin over next three years. K-Fin also generates high surplus and has been pragmatic with acquisitions. Hence, K-Fin may be a higher-growth EM peer for Indian and global platforms like CAMS, SS&C, JTC Group, Vistra, CITCO, CSC and Apex Group. We maintain our ‘Buy’ call with revised price target of Rs 570 (560 earlier) based on 33x Sep-25 PE, said Jefferies in its report.
K-Fin on Friday, reported 28% YoY growth in earnings aided by 16% growth in revenues and some margin expansion. Growth in revenues was led by 16% growth in domestic MF solutions and 48% in the international segment, whereas global business service lagged with a decline of 22%. The growth in revenues was led by 21% growth in mutual fund AUM, 13% in clients for issuer solutions and strong client wins in international RTA and fund admin segment.
Jefferies however, has cautioned that the potential risks can arise from a tighter cap on MFs, slower ramp-up in new segments, heightened capital market volatility and a pick-up in IT hiring (and pressure on manpower costs). There is also a minor risk of overpaying for an acquisition, but history suggests acquisitions have been at reasonable valuations, said the report.
