KFINTECH - KFin Technologies Limited Share Price

Management of KFin Technologies Limited provided a positive outlook during the Q1 FY '26 earnings conference call. Key findings highlighted the company's robust growth trajectory across various sectors, notably:

• Mutual Fund Business: KFin Technologies reported a 17.2% growth in domestic mutual fund revenue, with overall AUM around 32.5%. They secured 3 out of 4 new mutual fund mandates, reflecting a strong 75% win rate. The company's SIP market share stands at 39%, significantly higher than their overall AUM market share, which is expected to drive future growth.

• Issuer Solutions: The company has increased its market share from 48% to 51% among NIFTY listed companies. KFin added 800 clients in the last quarter and is on track to surpass 10,000 clients by year-end. Upcoming IPO mandates are anticipated to contribute to revenue growth in the latter part of the year.

• National Pension System (NPS): KFin Technologies has reached a 10% market share in the private NPS segment, with growth outpacing the industry at 32% annualized. The recent focus on enhancing service quality is expected to improve margins in the coming quarters.

• International Segment: KFin reported growth of 36% in international solutions, bolstered by new client wins across Southeast Asia, including significant contracts in Malaysia and Singapore.

• Overall Financial Performance: The company achieved a revenue growth of 15.4% year-over-year, with EBITDA margins of 41.5%. PAT rose by 13.5% with a margin of 28.2%. The CFO indicated that costs were well-managed, rising slightly less than revenues.

Management expressed confidence that these trends will sustain growth, expecting a revenue increase of over 15% for the year and consistent improvement in operating margins as operational efficiencies scale with AUM growth.

Q&A Section Summary from Earnings Transcript - July 25, 2025

Question 1: "Just wanted to understand how much of the yield decline is due to telescopic pricing and how much from volume discounts given to fast-growing clients? Should we expect more than a 4% drop?"

Answer: "The yield decline from 3.6 to 3.43 does reflect a 5% drop which is largely seasonal. This year had more contract renewals impacting revenue. I expect the average yield to normalize around 3% to 4% over the next years, as most discounts have already been factored in for this quarter."

Question 2: "On the Issuer Solutions side, what needs to happen for investor folios to start accelerating? Growth seems to have moderated."

Answer: "Yes, there's a slight decline in folios. Retail influx typically peaks in Q3 and Q4 due to corporate actions. I anticipate a rebound as market sentiment improves, especially as we see many IPOs hitting the market soon."

Question 3: "Has the competitive dynamics in the Issuer Solutions segment changed with your market share dropping in MainBoard IPOs?"

Answer: "While our market share by value shows 18%, we still captured over 40% of IPOs by count. The drop was influenced by a single large IPO from a competitor. Our wins are intact; expect these numbers to rebound with upcoming IPO mandates."

Question 4: "Regarding the KRA business, which key clients have you won, and what is your strategy?"

Answer: "We secured five marquee clients, including AMCs as clients for our KRA services. Our aim is to onboard all existing MFRTA clients to enhance operational efficiency. Revenue will be accounted separately from MFRTA as this is a distinct service offering."

Question 5: "What's the reason for Ascent's EBITDA not improving despite 36% revenue growth?"

Answer: "Ascent is in high-growth mode, investing heavily in team expansion across markets. The focus is on driving technological advancements and client acquisition, which will ensure EBITDA improvements as we move forward."

Question 6: "Can we expect the domestic mutual fund EBIT margins to return to 59%-60%?"

Answer: "Yes, typically Q1 sees margin compression due to pricing and inflation impacts. As AUM grows, margins should stabilize, moving back towards historical ranges as new client growth from subsequent quarters kicks in."

Question 7: "What can you share about the ticket sizes for the new fund administration contracts?"

Answer: "New contracts include platforms and ongoing services across different sectors. Revenue structures will vary"”some are episodic while others provide ongoing service fees. I'll provide specific figures offline for more clarity."

These summaries reflect the essential insights and guidance from the Q&A session of the earnings call.