KFin Technologies Limited IPO Details
KFin Technologies Limited, incorporated in the year 2017 is a renowned technologically-driven financial service platform. The company offers solutions and services for corporate issuers and asset management companies across asset classes across India and provides a range of options for investors, including transaction origination and management for mutual funds as well as private retirement plans in Malaysia and in the Philippines as well as Hong Kong on account of the following:
- As on September 30, 2022, it is India’s largest investor solutions provider to Indian mutual funds, based on number of AMC clients serviced, providing services to 24 out of 41 AMCs in India, as on September 30, 2022, representing 59% of market share based on the number of AMC clients
- As on September 30, 2022, it is the only investor and issuer solutions provider in India that offers services to asset managers such as mutual funds, alternative investment funds (“AIFs”), wealth managers and pension as well as corporate issuers in India, besides servicing overseas clients in South East Asia and Hong Kong.
- It is servicing 301 funds of 192 asset managers in India as on September 30, 2022, representing 30% market share based on number of AIFs being serviced.
- It is one of the three operating central record keeping agencies (“CRAs”) for the National Pension System (“NPS”) in India as on September 30, 2022.
- As on June 30, 2022, out of the 60 AMCs in Malaysia across wholesale funds, unit trust funds and private retirement schemes as specified in the CRISIL Report, they are servicing 18 AMC clients in Malaysia in addition to three clients in Philippines and Hong Kong as on September 30, 2022.
- It is the largest issuer solutions provider in India based on number of clients serviced, as on September 30, 2022. (Source: CRISIL Report).They are one of only two players of scale in India’s issuer solutions space where they hold a 46% market share based on the market capitalization of NSE 500 companies and a 37% market share based on number of clients serviced within NSE 500 companies, each as on September 30, 2022.
Their platforms, including KARISMA, KPRISM, KREATION, FINTRACKS, eAGM, and a number of others, significantly lower the total operating costs while accelerating business growth, investor satisfaction levels, and client value at the same time. KFintech provides all the services, such as Fund accounting and administration, Investor servicing (Transfer Agency), CRM system, Compliance, physical infrastructure (branches), etc., enabling a laser-like focus on investment management.
Their business wise clientele are also described below:
Objective of the Issue
It is proposed that the Fresh Issue’s net proceeds be used as follows:
- For the purpose of carrying out the Promoter Selling Shareholder’s Offer to Sell Up to 2,400 crores of Equity Shares.
- To benefit from listing equity shares on stock exchanges
| KFin Technologies Limited | Details |
|---|---|
| Price Band | ₹ 347 to ₹ 366 per share |
| Face Value | ₹ 10 per share |
| Issue Size | 1500 Crs |
| Opening Date | 19 Dec 2022 |
| Closing Date | 21 Dec 2022 |
| Allotment | 26 Dec 2022 |
| Initiation of Funds | 27 Dec 2022 |
| Credit to Demat | 28 Dec 2022 |
| Listing Date | 29 Dec 2022 |
| Pre Issue Share Holding | 74.37% |
| Post Issue Share Holding | 49.91% |
| 1 lot | 40 Shares |
| Retail Quota | 10% |
| QIB Quota | 75% |
| NII Quota | 15% |
| Retail (Min) | 1 Lot (40 Shares) |
| Retail (Max) | 13 Lots (520 Shares) |
| S-HNI (Min) | 14 Lots (560 Shares) |
| B-HNI (Min) | 69 Lots (2760 Shares) |
| Promoters | General Atlantic Singapore Fund Pte. Ltd. |
| Draft Red Herring Prospectus | DRHP |
| Red Herring Prospectus | RHP |
| Grey Market Premium | Click Here |
| Allotment Status | Check Here |
The KFin Technologies IPO’s bid period is from Dec 19, 2022, at 10:00 A.M., to Dec 21, 2022, at 5:00 P.M. UPI Mandate confirmation must be received by 5 PM on the day the issue closes.
EBITDA & PAT (in Crs)
EBITDA– Earnings Before Interest Tax Depreciation & Amortization PAT – Profit After Tax
Total Assets, Share Capital and Borrowings (in Crs)
Revenue Growth (in Crs)
Peer Comparison
| Particulars | KFin Technologies Limited | Computer Age Management Services Limited |
|---|---|---|
| Face Value | 10 | 10 |
| EPS | 9.36 | 58.41 |
| PE | 39.10 (taking 366 as the listing price) | 39.37 |
| RoNW% | 29.99 | 49.32 |
| Revenue from Operations (in ₹ Crs) | 639.50 | 909.66 |
| EBITDA Margin (%) | 45.5 | 47.6 |
| PAT Margin (%) | 23 | 31 |
Analysis:
KFin Technologies Limited is going to be one of the only 2 listed companies after its listing in the field of capital market ecosystem. As we already have seen that most of the AMC take its services and the list of its clientele already shared above.
If we check all the fundamental parameters and start with the chart of EBITDA, it simply depicts that the earnings are continuously increasing from past 2-3 years. Though profit is also increasing but we have seen a loss of 64.50 crs in the FY 2020 though earnings increased to almost 217 crs in FY 2020 from 164 crs in FY 2019 and that is majorly due to taxation and some legal expenditures though sales and earnings were good in FY 2020 also. Tax expense as per RHP was 13.9 crs in FY 2019 which rose to 132 crs in FY 2020 which again then dropped to 55.4 Crs. So, this factor may be neglected which reaching to any conclusion.
As per our chart 2, we can see continous increase in the Total Assets of the company which is accompanied with continous decrease in the Total Borrowings. Total debt reduced to 122.50 crs in FY 2021 as compared to 167.60 in FY 2020, which is major decrease from total borrowings of 375.40 crs in FY 2019, though share capital remain same. So this is in favour of the firm and depicting the growth of the company in the last 3 years.
Taking the EPS as 9.36 as per RHP till March 2022, PE ratio is 39.10 which is at par in comparison to the Industry PE of 39.37. This simply depicts that the IPO price is resonable still we cannot reach to any conclusion without considering other fundamental parameters.
RoNW of 29.99% & EBITDA margin of 45.5% as per RHP in comparison to CAMS RoNW of 49.32% is on the lower side and at par with the CAMS EBITDA margin of 47.6%. On comparing its own Pat Margin growth then it is on the growth path and it can be confirmed by checking the revenue from operations which is also steadily increasing on YOY basis. If we check the the PAT in the last six months till Sep 2022, it can be seen that the profit earned in the first half is almost equal to 854 crores which is almost 176 crores more than the profit earned will Sep 2021. This depicts that the company is on the high growth path.
So, looking at the current market scenario, we might not get good listing returns. However, for the listing gain grey market premium can be checked and can be applied on the second or third day.
But looking at the services offered by the firm and good fundamental parameters with only one listed competitor in the market, long term investment in this firm looks reasonably well. This firm is on the growth path and can fetch tremendous returns in the future. Since, the market condition is not good for now so it might loose out on the listing gain.