KFin Technologies IPO (KFintech IPO) Details and Review – Should you Subscribe?

Hyderabad based KFin Technologies IPO would open for subscription on 19th December 2022. KFin Technologies Limited is the leading technology driven financial services platform in India. Company has generated strong revenue growth in the last 3 years and 6 months. Should you invest in KFin Technologies IPO?

Also Read: This A Rated NCD Bond gives 9.5% interest rate in Dec-22 issue

About KFin Technologies Limited

Company is leading technology driven financial services platform in India. It provides 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:

1) The are India’s largest investor solutions provider of Indian mutual funds, based on number of AMC clients serviced. They are providing services to 24 out of 41 AMCs in India representing 59% of market share based on the number of AMC clients. They have signed on two new AMCs that are yet to launch operations as on September 30, 2022.

2) Further, through its acquisition of Hexagram, they serve six AMCs in India on fund accounting, of which, three are its existing AMC clients in India for investor solutions.

3) They are the only investor and issuer solutions provider in India that offers services to asset managers such as mutual funds, alternative investment funds, wealth managers and pension as well as corporate issuers in India, besides servicing overseas clients in South East Asia and Hong Kong.

4) They are servicing 301 funds of 192 asset managers in India, representing 30% market share based on number of AIFs being serviced.

5) They are one of the three operating central record keeping agencies in the National Pension System in India.

6) 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. In addition, they have signed two new AMCs in Malaysia and one AMC in Singapore that are yet to launch operations.

7) They are the largest issuer solutions provider in India based on number of clients serviced. They are one of only two players of scale in India’s issuer solutions space where we 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.

KFin Technologies IPO Details and Review

KFin Technologies IPO – Key Details

Opening Date 19-Dec-22
Closing Date 21-Dec-22
Issue Type Book Built Issue IPO
Face Value Rs 10 per equity share
IPO Price band Rs 347 to Rs 366 per equity share
Lot Size 40 Shares
Min Order Quantity 40 Shares
Listing at BSE and NSE
Total Issue Size Rs. 1500 Crores

KFin Technologies IPO RHP

What are the strengths of KFin Technologies Limited?

1) Scaled platform with strong track record of growth and market leadership

2) Its diversified multi-asset servicing platform is well-positioned to benefit from strong growth across large markets in India and South East Asia

3) Unique “platform-as-a-service” business model, providing comprehensive end-to-end solutions enabled by technology solutions developed in-house

4) Deeply entrenched, long-standing client relationships with a diversified and expanding client base Asset-light business model with recurring revenue model, high operating leverage, profitability and cash generation

5) Experienced management team, backed by a strong board and marquee shareholders, along with a strong culture of compliance

What are the Objects of the IPO Offer?

KFin Technologies IPO Size is Rs 1,500 Crores which is entirely OFS.

Under OFS, selling shareholders would sell their shares and the company would not get any money from this IPO proceeds.

Who are the promoters of KFin Technologies Limited?

General Atlantic Singapore Fund Pte. Ltd is the promoter of the company.

How is the company financial track record?

Here are the total assets, revenues and profits of the company in the last 3 years and 6 months.

Financial Year ending / Period ending (Amt in Crores)
Particulars FY20 FY21 FY22 30-Sep-22
Total Assets 868.4 922.6 1,026.4 1,114.8
Revenues 455.3 486.2 645.6 353.8
Profit After Tax 4.5 -64.5 148.6 85.3
Profit % 0.99% -13.27% 23.01% 24.12%

Why to invest in KFin Technologies IPO?

Here are the positive factors in this company.

1) KFin Technologies Limited is a leading technology-driven financial services platform in India. Company has diversified streams of income sources.

2) Company generated strong revenue growth in the last 3 years and 6 months.

3) Company margins have improved significantly in FY22 and for 6 months ended Sep-22. However, one should note that the company generated thin margins in FY20 and incurred losses in FY21. Regd FY21, one can attribute this due to covid-19 pandemic.

Risk Factors of investing in KFin Technologies IPO

1) Entire IPO proceeds are OFS and company would not get anything from this.

2) Its erstwhile promoters are subject to ongoing investigations by enforcement agencies (since Kfintech was part of Karvy group earlier which was hit due to scam), including Enforcement Directorate, Ministry of Finance, Government of India and the outcome of such investigations may adversely impact the company.

3) Significant disruptions in its information technology systems or breaches of data security could adversely affect its business and reputation.

4) A decline in the growth, value and composition of AAUM of the mutual funds managed by its clients may adversely impact the average revenue earned by them from mutual funds and may have a significant adverse impact on future revenue and profit.

5) There are outstanding legal proceedings involving the company, Subsidiaries, Group Companies and certain of its directors.

6) In the last 3.5 years, they derived over 50%, of its revenue from operations from its top 5 customers and the loss of one or more such client could adversely affect company business.

7) Investors should read complete risk factors indicated in the RHP of the IPO document before investing in this IPO.

How to buy KFin Technologies IPO online through Zerodha?

If you do not have Zerodha account, sign-up here and proceed to the next step.

If you have a demat account with Zerodha, you can apply this IPO online using the UPI as a payment gateway. Zerodha customers can apply in this IPO by login into Zerodha Console submitting an IPO application form.

Follow below steps to apply this IPO in Zerodha platform:

1) Visit the Zerodha portal and login to the console.

2) Go to Portfolio and click the IPOs link.

3) Visit ‘KFin Technologies Limited IPO’ row and click the ‘Bid’ button.

4) Enter your UPI ID, Qty and the Price which you want to bid.

5) Click on ‘Submit’ IPO application form.

6) Visit the UPI App (net banking or BHIM) to approve the mandate.

KFin Technologies IPO Important Dates

Here are the important dates about Subscription, Allotment and Listing.

Offer Open 19-Dec-22
Offer close 21-Dec-22
Finalization of Allotment 26-Dec-22
Initiation of Refunds 27-Dec-22
Credit to Demat Account 28-Dec-22
IPO Shares Listing Date 29-Dec-22

Frequently Asked Questions (FAQs)

What is KFin Technologies IPO date?

This IPO would open on 19th December, 2022 and closes on 21st December, 2022.

What is KFin Technologies Share Price?

The IPO share price band is Rs 347 to Rs 366 per share.

What is KFin Technologies IPO Rating?

Company do not require to get an IPO rating as this issue is for equity shares. Currently, KFin Technologies short term rating and long term rating is not available.

How much portion allocated to each group of investors in this IPO?

1) QIB - Not less than 75% of the offered shares 2) NII / HNI - Not less than 15% of the offered shares 3) Retail - Not less than 10% of the offered shares

What is KFin Technologies IPO GMP today?

GMP is nothing but the premium at which the shares are trading in offline market. This is just an indication about the IPO price as it is unorganized market. There is no major trading’s happening in offline market, hence KFin Technologies GMP is not available.

KFin Technologies Share Price Valuation

KFin Technologies IPO price band is Rs 347 to 366 per share. If we consider FY2022 EPS of Rs 9.36, the P/E ratio works out to be 39x. If we consider last 3 years weighted EPS of Rs 3.3, the P/E ratio works out to be 110x. If we annualise 6 months ended Sep-22 EPS, P/E ratio works out to be 36x. Means company is asking for the issue price in P/E of 36x to 110x. There is only listed peer Cams trading at P/E 39x, hence we can conclude Kfintech IPO price is fully priced.

Also Read: Which Mutual Fund gave highest SIP returns in last 20 years?

KFin Technologies IPO Review – Is it good or bad for investment?

After going through all these points, you might be wondering whether KFin Technologies IPO is good or bad for investment?

KFin Technologies Limited is a leading technology-driven financial services platform in India. Company generated strong revenue growth in the last 3 years and 6 months. While company generated thin margins in FY20 and incurred loss in FY21, it generated strong margins in FY22 and 6 months ended Sep-22.

On the other side, beyond risk factors indicated above (including that it was part of scam hit Karvy group), the issue price is fully priced.

Considering both positive and negative factors, one can invest in this IPO for a medium to long term.

Disclaimer: This article is for educational purpose only. Investing in IPO is high risk and one can lose their capital. Please consult financial advisor before investing in such high-risk investment option.

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Suresh KP

3 comments

  • Sunil kumar

    Beware if this IPO, Kfin Tech is a sister concern of Karvy securities which has committed a fraud on investors. Its due to this fact that company changed its name as Kfintech whuch sound like a Tech company and nothing to do with Karvy name.But culture of the company wont change by changing name and distancing itself from their own company. This company is a useless company and is bound to get wound up, the reason us being its not customer focused and harass investors to no end. Ask those investors who deal with Kfintech as RTA , the experience would be horrific , and you will know the truth on your own.Those investors who want to loss their hard earned money can invest. It might give u short term profits but remember the culture of the company, it will surely commit fraud in future, in fact , it must already be existing but is unraveled as of now.and why to invest in such companies when better companies exist with better corporate governance.

    • Hello Sunil, It was part of Karvy group earlier (while Karvy Stock Broking and Karvy Fintech has 2 different business models), however Kfintech is disassociated from Karvy 3 years back and it was acquired by private equity players.

      Coming to company culture issue, these can be vouched only by employees of the company. End of the day, for share holders, it would be revenues, profits and company growth matters.

      Last part, investment in equity is high risk. Check what happened in Satyam Computer Scam earlier (which was in top-4 IT companies in India). Check DHFL scam few years back (which was AAA rated company). No one can predict it. The only way is to diversify and invest across companies and avoid investing more than 5% in single stock.

      • Sunil kumar

        Thanks for the info that kfintech is acquired by private equity players. But Are operations run by them or the same owners are running the company. If it’s the same owners , then governance issues would continue to exist. Moreover, cultural issues can be vouched not just by employees but also by its Business partners ie Customers, vendors etc and its Customers. Any investor who dealt with Kfintech as RTA would have experienced nightmares and not just once but every time you interact. The culture is clearly visible, its not customer focussed, Since company investors are its customers and customers are experiencing high level of dissatisfaction, its only a matter of time that Kfintech will vanish may be not in 1 to 5 years but surely in 15 to 25 years. Today it’s surviving because investors are still not active but are enduring the pain. The day Investor community is active and challenge Kfintech in courts, it will be a dooms day fir Kfintech. Till such time, it might continue.

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