KFin Technologies shares soar over 7% to new all-time high on solid Q1 earnings, up 186% in 16 months

Shares of KFin Technologies, a leading technology-driven financial services platform, continued their upward trend for the fourth consecutive session on Monday. The stock surged by 7.5%, reaching an all-time high of ₹833 per share, following the company's strong performance in the June quarter. This performance was driven by new contract wins, revenue and profitability growth, and margin expansion across various segments.

On Friday, after market hours, the company announced its June quarter results, reporting a net profit of ₹68.07 crore, marking a 57% increase compared to the net profit of ₹43.38 crore in the same period last year. The revenue from operations for the quarter was ₹237 crore, reflecting a year-over-year growth of 30.9%.

The company’s Average Assets Under Management (AAUM) grew by 41.3% year-over-year in Q1 FY25, outpacing the industry growth rate of 36.9%. It holds a 32.3% overall AAUM market share and a 33.4% equity AAUM market share. The company secured significant contracts during the quarter including a data lake contract from one of the largest AMCs, contracts from two AMC clients and AMFI for digital asset development, and a mutual fund data services contract from a fintech platform.

The company added 248 corporate clients in Q1 FY25, bringing the total client base to 6,319, and holds a 46.4% market share among NSE 500 companies. Additionally, KFin Tech managed 26.3% of the main board IPOs in terms of issue size and achieved a 33.3% market share in terms of the number of IPOs in Q1 FY25, as per the company earnings report. 

In the National Pension System (NPS), its subscriber base grew by 26.9% year-over-year, compared to the industry growth rate of 12.0%, adding 41,744 subscribers in Q1 FY25 and reaching an overall subscriber base of 1.3 million.

The company’s market share in the overall subscriber base increased to 8.4% as of June 30, 2024, from 7.4% a year earlier.

Overall, KFin Tech continues to demonstrate strong growth and market leadership in both investor and issuer solutions. The company's strategic expansions in corporate client acquisition, significant market share in AAUM, and dominance in IPO management underscore its robust performance and strategic positioning in the financial services industry.

KFin Tech 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, pensions, and corporate issuers. It is also one of the three operating central record-keeping agencies for the National Pension System in India.

The company's shares were listed on the Indian exchanges in December 2022. After a muted performance for the first four months, they began an upward rally, which has continued into the current month, resulting in a cumulative gain of 186% over 16 months.

Should you buy the stock post Q1 numbers?

Global brokerage firm Jefferies has maintained its 'buy' rating on the stock following the company's strong performance in the June quarter. Jefferies set a base case target price of ₹930 per share, with a bullish scenario target of ₹1,080 per share. In a downside scenario, the target price is ₹700 per share.

The brokerage noted that the company is gradually evolving into a data processing and analytics solution provider, increasing its share of value-added services to boost client dependency. 

Jefferies highlighted that the company's entry into the global AMCs and account aggregator segment can expand its horizons and drive growth. Additionally, the brokerage emphasized the company's strong product proposition and extensive experience in offering investor solutions, which can facilitate faster ramp-up.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.