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Company Description

KFin Technologies are a leading technology driven financial services platform providing comprehensive services and solutions to the capital markets ecosystem including asset managers and corporate issuers across asset classes in India and provide several investor solutions including transaction origination and processing for mutual funds and private retirement schemes in Malaysia, Philippines and Hong Kong, on account of the following:

As on September 30, 2022, KFin Technologies is India’s largest investor solutions provider to Indian mutual funds, based on the number of AMC clients serviced. They are 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. In addition, we signed on two new AMCs that are yet to launch operations as on September 30, 2022. Further, through their acquisition of Hexagram, they serve six AMCs in India on fund accounting, of which, three are existing AMC clients in India for investor solutions.

As on September 30, 2022, KFin Technologies 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.

KFin Technologies 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.

KFin Technologies 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, they are servicing 18 AMC clients in Malaysia in addition to three clients in Philippines and Hong Kong as on September 30, 2022. In addition, they have signed two new AMCs in Malaysia and one AMC in Singapore that are yet to launch operations as on September 30, 2022.

Valuation

KFintech is a leading technology driven financial services platform providing comprehensive services and solutions to the capital markets ecosystem including asset managers and corporate issuers across asset classes in India and provide several investor solutions including transaction origination and processing for mutual funds and private retirement schemes in Malaysia, Philippines and Hong Kong. KFin Technologies has a scaled platform with a strong track record of growth and market leadership.

The company has asset-light business model with recurring revenue model, high operating leverage, profitability and cash generation. The company is available at the upper end of the IPO price band, it is offered at 41.3x its FY22 earnings with a market cap of Rs. 6,443.4 million. The valuation of the IPO appears to be reasonable when we compare with listed peers. The company has significant scope for growth, considering its diverse product profile and addition of new client base and bright prospects ahead, we recommend a "Subscribe" rating to this IPO.

KFin Technologies is the largest issuer solutions provider in India based on the number of clients serviced, as on September 30, 2022. 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 the number of clients serviced within NSE 500 companies, each as on September 30, 2022. Player of scale corresponds to entities with minimum 25% market share (in terms of serviced clients) within NSE 500 companies in the Indian issuer solutions space. They also had a 40% and 29% market share based on the number of mainboard initial public offerings handled in Fiscal 2022 and six months ended September 30, 2022, respectively.

KFin Technologies provides several critically important services to the Indian capital markets ecosystem. The clients utilize their platform for its different service offerings for a substantial part of their operational requirements. They provide a wide array of investor and issuer solutions including omni-channel transaction origination and processing, channel management, which is mapping of mutual fund schemes of AMCs to distributors selected by the AMCs and related distributor management, including brokerage computation and channel servicing which includes brokerage pay-out, query solution and GST compliance assistance, customer on boarding with integrated KYC, unit allocation and redemption, reporting and compliance checks on a real time basis. They also offer asset servicing products including a distributor platform, an investor platform, and an online transaction platform together with data analytics. Their technology products, solutions and platforms help its clients to focus on their core business functions such as investment management and sales and marketing functions whilst entrusting bulk of operational front office, middle office and back office activities to their platform.

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