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* Company Background: KFin Technologies Ltd (KFin Tech) 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. They provide several investor solutions including transaction origination and processing for mutual funds and private retirement schemes in Malaysia, Philippines and Hong Kong. They are servicing 301 funds of 192 asset managers in India and 18 AMC clients in Malaysia in addition to 3 clients in Philippines and Hong Kong, as on September 30, 2022.

* Largest investor solutions provider: KFin Tech is India’s largest investor solutions provider to Indian mutual funds, based on many AMC clients serviced. They provide services to 24 out of 41 AMCs in India. Besides India, it also operates in multiple large markets such as Hong Kong, Malaysia and Philippines, along with presence in Oman and Maldives, across several of these asset classes.

* Unique “platform-as-a-service” business model providing comprehensive end-to-end solutions: The company’s business model platform-as-a-service provides end to end solutions for their clients. In the last 3 years, they have launched over 20 new products and 2 more are in the pipeline. Besides, it has a varied set of solutions for the wealth management business like a digital onboarding solution, wealth aggregation platforms that accommodates customer relationship management tools, financial planning, multiple asset class transactions, order management, and various client reporting activities along with this.

* Have long-standing client relationships: The investor solution business which they are present in has few players as it has a high entry barrier like it requires high technology expertise. KFin Tech provides end-to-end solutions and services with significant expertise to its clients and so they are able to retain and maintain long term relationships with clients.

* Plans going forward: KFin Tech wants to maintain leadership position in domestic mutual fund as well as relationship with existing client base. Besides, their focus remains on further expanding in international markets as well as developing new innovative products and platforms with sector agnostic capability that will further allow them to diversify their client base.

* Financial: On the financials front, the company’s revenue has grown at a CAGR of 19.2% Over FY20-22. The company posted losses of Rs 64.5cr in FY21 due to Covid led disruption, however in FY22, profits saw decent growth and it improved to Rs 148.6cr. On the valuation front, it is trading at PE of 40x FY22 EPS which we believe is expensive as compared to its near peer.

* Key Risk: 1) There are outstanding legal matters against the promoter as well as the company. 2) Operate in a highly regulated environment. 3)Significant portion of revenue is contributed by a few customers. 4) Fully Offer for Sale 5) Retail portion is just 10% of the total issue

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