IPO Analysis: KFin Technologies Limited | Jobs Vox

The price band of the issue has been fixed at Rs 347 to Rs 366 per share.

IPO Level: Invest for the long term

About it:

Kefin Technologies is a technology-led financial services platform in India that provides a complete range of services and solutions to corporate issuers and asset managers who have created the capital markets ecosystem. The company is issuing its initial public offering (IPO) of equity shares at a face value of Rs 10 per equity share. The price band of the issue has been fixed at Rs 347 to Rs 366 per share. The issue amount is Rs 1,500 in the upper price band.

The opening date of the IPO is December 19, 2022 and will close on December 21, 2022. The issue may be listed on the exchange on December 29, 2022. The IPO market lot size is 40 shares and more. A retail-individual investor can apply for up to 13 lots (520 shares or Rs 190,320) in the highest price band.

Date of opening of IPO	19-December-22
IPO closing date	21-December-22
The type of problem	Book made version IPO
Face value	10 rubles per share
IPO price	347 to 366 rubles per share
Minimum order quantity	40 shares
List by	BSE, NSE
The size of the problem	40,983,607 shares of FV Rs 2*
	(Together up to 1500 CRs) *
Offer for sale	40,983,607 shares of FV Rs 2*
	(Together up to 1500 CRs) *
QIB shares are offered	Not more than 75% of discount.
Retail shares are offered	Not less than 15% of the discount
NII (HNI) shares are offered.	Not less than 10% of the discount
* High price band

Items of the case

The company will not receive any proceeds from the offer and all proceeds will go to the selling shareholders.

Holding a promoter

Pre-event 74.37 percent, post-IPO the promoter’s stake will be 49.91 percent.

About the company

KFin Technologies Limited, founded in 2017, is a leading technology-driven financial services platform. In India, the company provides services and solutions to asset managers and corporate issuers in asset classes, and in Malaysia, the Philippines and Hong Kong to investors such as transaction origination and processing for mutual funds and private pension plans.

In the year Based on the number of AMC clients as of September 30, 2022, the company is India’s largest mutual fund investor solutions provider. It serves 24 of the 41 AMCs in India, representing a 59 percent market share in terms of AMC customers. The company offers 301 funds of 192 asset managers in India.

As of September 30, 2022, KFin Technologies Limited is India’s only investor and issuer solutions provider, serving asset managers such as mutual funds, alternative investment funds (“AIFs”), wealth managers, pension funds and corporate issuers.

In the year Effective September 30, 2022, KFin Technologies Limited is one of the two Central Record Keeping Agencies (“CRAs”) for the National Pension System (“NPS”) of India. It is India’s largest outsourcing solutions provider in terms of customer offerings.

The company has categorized its products and services as follows.

1. Investor Solutions (Account Creation, Transaction Origination, Redemption, Broker Calculation, Compliance/Regulatory Report Record Keeping). Domestic mutual funds, international mutual funds, retirement services, alternative investments and wealth management are all available.

2. Issuer Solutions (Folio Creation and Maintenance, Transaction Processing for IPO, FPO and other Corporate Actions, Compliance/Regulatory Reporting Recording MIS, Virtual Voting e-AGM, e-Vault).

3. International business domestic joint services (mortgage services, legal services, transfer agency, finance and accounting).

The company executed 1.6 million average transactions per day, including 1 million strategic transactions per day such as Strategic Investment Plans (“SIPs”) and USD 3.2 billion, average daily disbursements for domestic mutual funds over the past six months. In FY22 and 1HFY23, it maintained more than 99.5% accuracy of transactions executed within agreed time limits.

Financial

In FY20-22, revenue and PAT increased at a CAGR of 19 percent and 437 percent, respectively, while EBITDA margin rose to 45 percent from 35.3 percent in FY20. The company’s revenue of Rs 645.56 crore rose by 22.33%; EBITDA increased to Rs 290 crore from Rs 210 crore in FY21. PAT stood at Rs 148.55 crore bn from a loss of Rs 64.5 crore in FY22. In 20-22, the company’s average debt-equity ratio stood at ~0.6x.

Time Completed (Bir Crore)	FY19	FY20	FY21	FY22
Total assets	1021.78	868.38	922.61	1026.41
Total income	164.76	455.26	486.2	645.56
Profit after tax	8.96	4.52	-64.51	148.55
net worth	519.28	409.58	346.4	644.34
Total loan	406.01	375.44	346.13	122.51

Price and Outlook

The company has an asset-light business model with high operating performance, profitability and cash flow. The company’s shares are at the upper end of the IPO price band, at 41.3x FY22 earnings and 35.92x 23rd FY23 earnings if we annualize it. The discount appears to fully cover the positive value of the company and leaves very little on the table for IPO underwriters compared to other listed valuations. So only a long term investor has a long term investment horizon.