The shares of the Saas-based solution provider gained up to 1 percent after the company expected over 30 percent growth in Assets Under Management (AUM).
With a market capitalization of Rs 17,885.56 crore, the shares of KFin Technologies Ltd were trading at Rs 1,045 per share, increasing around 0.65 percent as compared to the previous closing price of Rs 1,038.30 apiece.
Reason for rise:-
According to a CNBC report, Vivek Mathur, the Chief Financial Officer of KFin Technologies, recently announced expectations for over 30% growth in Assets Under Management (AUM). This growth is anticipated to be split evenly, with 15% attributed to market growth and 15% driven by inflows from clients. Mathur emphasized that this positive outlook aligns with the company’s broader revenue growth guidance of 18-20%.
Financial Analysis:-
Looking forward to the company’s financials, KFin Technologies Ltd.’s revenue magnified by 31 percent from Rs 182 Crore in Q1FY24 to 238 Crore in Q1FY25. During the same period, net profits zoomed by 58 percent from Rs 43 crore to Rs 68 crore.
M&A Strategy:
The company’s focus is pursuing international expansion through accretive acquisitions targeting new geographic markets, aiming for 10-15% revenue growth. With Rs 452 crores in cash reserves, the company is well-positioned to fund upcoming deals that are expected to improve operating margins.
Management expects a typical Q1 slowdown but is confident in upcoming quarters. EBITDA margins are expected to remain in the 40%-45% range, with potential for improvement as operational efficiencies are realized.
Market share:-
KFin Technologies is the largest Registrar and Transfer Agent (RTA) in India, servicing 25 out of 47 asset management companies (AMCs) and holding a 46.4% market share in corporate registry services
Expansion into international markets:-
KFin Technologies is actively pursuing expansion in international markets, particularly targeting the United States and Europe, with potential entry as early as the end of FY24 or Q1 FY25. The company has already established a presence in Southeast Asia, including Malaysia, Thailand, and the Philippines, and is looking to strengthen its foothold in Singapore and Hong Kong.
Ratio analysis:-
The company’s critical ratios show that the return on equity decreased from 22.53 percent in FY22-23 to 21.50 percent in FY23-24, while the return on capital employed decreased from 26.53 percent to 25.60 percent. The net profit margin (NPM) for fiscal year 23-24 is 30.26 percent.
Company profile:-
KFin Technologies Limited provides software as a service (SaaS) based end-to-end transaction management, and channel management, including brokerage computation and channel servicing, compliance solutions, and others.
Written by:- Abhishek Singh
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