KFin Technologies Limited
Please refer to important disclosures at the end of this report
1
Incorporated in 2017, KFin Technologies Limited is a leading technology-driven
financial services platform. The company provides services and solutions to asset
managers and corporate issuers across asset classes in India and provides several
investor solutions including transaction origination and processing for mutual funds
and private retirement schemes in Malaysia, the Philippines and Hong Kong. As on
September 30, 2022, the company is India's largest investor solutions provider to
Indian mutual funds, based on several AMC clients serviced. The company is also
servicing 301 funds of 192 asset managers in India as on September 30, 2022. The
company has classified its products and services in three categories viz. Investor
solutions (Account setup, Transaction origin, Redemption, Brokerage calculations,
Compliance, / Regulatory reporting), Issuer Solutions (Folio creation and
maintenance, Transaction processing for IPO, FPO etc), Global business domestic
mutual services (Mortgage services Legal Services Transfer Agency Finance and
accounting)
Positives: (a) Asset-light model with recurring revenue model. (b) Long standing client
relationships with a diversified and expanding client base. (c) Unique “platform-as-
a-service” business model providing comprehensive end-to-end solutions enabled
by technology solutions developed in-house.
Investment concerns: (a) Significant disruptions in information technology systems or
breaches of data security could adversely affect the business and reputation. (b) A
decline in the growth, value, and composition of AAUM of the mutual funds
managed by clients may adversely impact the average revenue earned from mutual
funds and may have a significant adverse impact on future revenue and profit.
Outlook & Valuation: In terms of valuations, the post-issue P/E works out to 41.3x
FY22 EPS (at the upper end of the issue price band) which is more than its peer
CAMS. Further, both the companies have similar EBITDA margins, however, CAMS
has better Net Profit margins. In addition, KTL has minimal debt while CAMS
operates at zero debt. Considering all the factors, we believe this valuation is at
expensive levels. Thus, we recommend a NEUTRAL rating on the issue.
Key Financials
Y/E March (₹ cr)
FY’20
FY'21
FY'22
Net Sales
450
481
640
% chg
7%
33%
Net Profit
5
(65)
149
% chg
-1526%
EBITDA (%)
35.3
44.1
45.0
EPS (Rs)
0.3
(3.8)
8.9
P/E (x)
1,333.2
-
40.6
P/BV (x)
14.7
17.4
9.4
ROE (%)
1.1
(18.6)
23.1
ROCE (%)
8.1
15.7
31.2
EV/Sales
14.3
13.1
9.5
Source: Company RHP, Angel Research
NEUTRAL
Issue Open: December 19, 2022
Issue Close: December 21, 2022
Offer for Sale: ₹1500cr
QIBs 75% of issue
Non-Institutional 15% of issue
Retail 10% of issue
Promoters 49.9%
Public 50.1%
Issue Details
Face Value: `10
Present Eq. Paid up Capital: ₹167.5cr
Fresh issue: ₹0cr
Post Eq. Paid up Capital: ₹167.5cr
Issue size (amount): ₹ 1500cr
Price Band: ₹347 - ₹366
Lot Size: 40 shares and in multiple thereafter
Post-issue mkt. cap: * `₹5,815cr - ** `₹6,133cr
Post Issue Shareholding Pattern
Promoters holding Pre-Issue: 74.37%
Promoters holding Post-Issue: 25.63%
*Calculated on lower price band
** Calculated on upper price band
Book Building
IPO NOTE
KFin Technologies Limited
December 19, 2022
KFin Technologies Ltd | IPO
Note
December 19, 2022
2
Company background
Incorporated in 2017, KFin Technologies Limited is a leading technology-driven
financial services platform. The company provides services and solutions to asset
managers and corporate issuers across asset classes in India and provides several
investor solutions including transaction origination and processing for mutual funds
and private retirement schemes in Malaysia, the Philippines and Hong Kong. As on
September 30, 2022, the company is India's largest investor solutions provider to
Indian mutual funds, based on several AMC clients serviced. The company is also
servicing 301 funds of 192 asset managers in India as on September 30, 2022.
Issue details
The IPO is completely made up of offer for sale of ₹1500cr.
Pre & Post Shareholding
(Pre-Issue)
(Post-Issue)
Particulars
No of shares
%
No of shares
%
Promoter
124,618,209
74.4%
83,634,603
49.9%
Public
42,950,674
25.6%
83,934,280
50.1%
Total
167,568,883
100.0%
167,568,883
100.0%
Source: Company, Angel Research
Objectives of the Offer
o The Objects of offer are to carry out the offer for sale of up to
40,983,607 equity shares, aggregating to 1500cr by existing
shareholders and to achieve the benefits of listing the equity
shares on the stock exchanges.
KFin Technologies Ltd | IPO
Note
December 19, 2022
3
Financial Summary
Income Statement (Consolidated)
Y/E March (₹ cr)
FY’20
FY’21
FY’22
Net Sales
450
481
640
% chg
7%
33%
Total Expenditure
291
269
352
Raw Material
-
-
-
Personnel
194
189
232
Others Expenses
97
80
119
EBITDA
159
212
288
% chg
34%
36%
(% of Net Sales)
35.3
44.1
45.0
Depreciation& Amortization
92
98
37
EBIT
66
114
251
% chg
72%
119%
(% of Net Sales)
14.8
23.8
39.2
Interest & other Charges
53
52
53
Other Income
5
5
6
(% of PBT)
29.1
7.5
3.0
PBT
19
68
204
% chg
265%
202%
Tax
14
132
55
(% of PBT)
75.6
195.6
27.2
PAT
5
(65)
149
% chg
-1526%
-
Share in profit of Joint venture
-
-
-
PAT
5
(65)
149
% chg
-1526%
-
(% of Net Sales)
1
-13.4
23.2
Basic EPS (Rs)
0.3
(3.8)
8.9
Fully Diluted EPS (Rs)
0.3
(3.8)
8.8
Source: Company, Angel Research
KFin Technologies Ltd | IPO
Note
December 19, 2022
4
Balance Sheet (Consolidated)
Y/E March (₹ cr)
FY’20
FY’21
FY’22
SOURCES OF FUNDS
Equity Share Capital
151
151
168
Reserves& Surplus
259
196
477
Shareholders’ Funds
410
346
644
Minority Interest
-
-
-
Total Loans
413
383
160
Other Liabilities
5
7
9
Total Liabilities
828
736
813
APPLICATION OF FUNDS
Net Block
100
105
125
Goodwill
591
525
543
Capital Work-in-Progress
0
3
35
Investments
13.54
95
93
Current Assets
153
188
223
Inventories
-
-
-
Sundry Debtors
88
111
113
Cash
18
23
45
Loans & Advances
0
0
0
Other Assets
46
54
65
Current liabilities
40
61
90
Net Current Assets
112
127
133
Deferred Tax Assets (net)
5
-
-
Deferred Tax Liabilities (net)
-
125
124
Other Assets
6
7
7
Total Assets
828
736
813
Source: Company, Angel Research
KFin Technologies Ltd | IPO
Note
December 19, 2022
5
Cash flow Statement (Consolidated)
Y/E March (₹ cr)
FY’20
FY’21
FY’22
Profit before tax
19
68
204
Depreciation
92
98
37
Change in Working Capital
(34)
-10
-3
Interest / Dividend (Net)
52
52
53
Direct taxes paid
(30)
-3
-50
Others
2
0
12
Cash Flow from Operations
101
205
253
(Inc.)/ Dec. in Fixed Assets
(7)
-30
-68
Movement in Bank Balances (Net)
25
6
0
Interest Received
4
2
5
Proceeds for sale of PPE
0
0
0
Acquisition of Subsidiary
(27)
0
(24)
Other non-current investments
98
(82)
(28)
Cash Flow from Investing
93
(104)
(115)
Proceeds from Issue of Share capital
0
0
289
Proceed / (Repayment) of long term borrowings
(16)
(32)
-352
Interest Paid on lease liabilities
0
0
0
Payment of lease liabilities
(9)
(12)
-13
Interest / Dividend (Net)
(65)
(46)
-39
Buy back of equity shares
(116)
0
0
Proceed/ (Repayment) of short term borrowings
0
0
0
Dividend paid
0
0
0
Cash Flow from Financing
(206)
(89)
(115)
Inc./(Dec.) in Cash
(12)
12
22
Opening Cash balances
23
12
23
Forex impact on cash and cash equivalent
1
(0)
0
Closing Cash balances
12
23
45
Source: Company, Angel Research
Key Ratios
Y/E March (₹ cr)
FY’20
FY'21
FY'22
Valuation Ratio (x)
P/E (on FDEPS)
1,333.2
-
40.6
P/CEPS
62.3
180.1
32.5
P/BV
14.7
17.4
9.4
EV/Sales
14.3
13.1
9.5
Per Share Data (Rs)
EPS (Basic)
0.3
(3.8)
8.9
Cash EPS
5.7
2.0
11.0
Book Value
24.2
20.5
38.1
Returns (%)
ROE
1.1
(18.6)
23.1
ROCE
8.1
15.7
31.2
Source: Company, Angel Research;
KFin Technologies Ltd | IPO
Note
December 19, 2022
6
Research Team Tel: 022 - 40003600 E-mail: [email protected] Website: www.angelone.in
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