Company Update : KFin Technologies by Motilal Oswal Financial Services Ltd
Non-MF revenue miss leads to a 13% miss on PAT
* KFin Technologies (Kfin) reported a 15% YoY growth in operating revenue to INR2.7b in 1QFY26 (9% miss), driven by 17%/24%/34% YoY growth in domestic MF solutions/issuer solutions/international solutions segments.
* Total MF AAUM serviced during the quarter grew 23% YoY to INR23.4t. Equity AAUM at 58% of total MF AAUM, grew 22% YoY to INR13.6t reflecting a market share of 33% (33.4% in 1QFY25).
* In the issuer services business, the main board IPO market share (concerning issue size) declined YoY to 18% in 1QFY26 (26.3% in 1QFY25). In the international investor solutions business, the number of clients reached 82, taking the total AUM serviced to INR864b. In the alternates and wealth business, the market share stood at 37% with an AUM of INR1.6t. NPS market share continues to rise and was at 9.9% in 1QFY26 (8.4% in 1QFY25), with an AUM of INR582b.
* Total operating expenses grew 16% YoY to INR1.6b (8% lower than expectations), with employee expenses growing 17% YoY to INR1.1b (inline) and other expenses rising 15% YoY to INR485m (22% below expectations). The cost-to-income ratio was at 58.5% (58% in 1QFY25).
* EBITDA grew 14% YoY to INR1.1b (10% miss) with EBITDA margin at 41.5% (42% in 1QFY25).
* KFin reported a net profit of INR773m, up 14% YoY (13% miss) in 1QFY26.
Valuation and view
* Structural tailwinds in the MF industry will drive absolute growth in MF revenue. With its unique ‘platform-as-a-service’ business model that provides comprehensive end-to-end solutions enabled by proprietary technology solutions, KFIN is well-positioned to benefit from strong growth across large markets in India and across the world.
* We have a Neutral rating on the stock with a TP of INR1,230 (based on 45x Mar’27E EPS). We will update our estimates after the conference call scheduled for 25th Jul’25.
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