KFin Technologies Limited is a leading technology driven financial services platform providing 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. Company provides several critically important services to the Indian capital markets ecosystem. Their clients utilize their platform for different service offerings for a substantial part of their operational requirements. They provide a wide array of investor and issuer solutions including omni-channel transaction origination and processing, channel management, which is mapping of mutual fund schemes of AMCs to distributors selected by the AMCs and related distributor management, including brokerage computation and channel servicing which includes brokerage pay-out, query solution and GST compliance assistance, customer onboarding with integrated KYC, unit allocation and redemption, reporting and compliance checks on a real time basis. They also offer asset servicing products including a distributor platform, an investor platform, and an online transaction platform together with data analytics. Their technology products, solutions and platforms help their clients to focus on their core business functions such as investment management and sales and marketing functions whilst entrusting bulk of operational front office, middle office and back office activities to platform. KFin is one of the two leading investor solutions providers in India as on September 30, 2022. The are providing services to 24 out of 41 AMCs in India, as on September 30, 2022. In addition, they signed on two new AMCs that are yet to launch operations as on September 30, 2022. They have on-boarded seven (including two AMCs that are yet to launch operations) of the last 11 new AMCs in India (including one AMC that has not yet appointed a registrar and transfer agent for their operations) for domestic mutual fund solutions. As on September 30, 2022, they have also on-boarded 15 of the last 21 mutual funds launched in India. Further, within investor solutions for Indian mutual funds, they had a market share of 32% based on overall AAUM managed by the clients and serviced by them during September,2022. Further, they have grown the market share of Equity AAUM managed by the clients and serviced by them from 29% for Fiscal 2020 to 35% for September 2022. As an issuer solutions provider, they provide a comprehensive set of corporate registry services including investor folio creation and maintenance, transaction processing for various corporate events and issues including initial public offerings, follow on public offerings, dividends, buybacks, rights issue and bonus issues, along with various compliance related reporting requirements and record keeping. They also provide various VAS and products to these issuers. As on September 30, 2022, company employed 5,155 personnel and majority of them are based in India. As per financial performance, Kfin has posted total income/net profits of Rs 455.26 Cr / Rs 3.82 Cr (FY20), Rs 486.20Cr / Rs (64.39) Cr (FY21) and Rs 645.56 Cr / Rs 148.00 Cr (FY22) and Rs 353.76 Cr / Rs 86.25 Cr (H1 FY23). So as per last three years data, company has shown zig-zag results and but after FY21, company has shown improved financials. They have posted an average EPS of Rs. 3.34 and average RoNW of 9.47% for last three fiscals. Issue is priced at a P/BV of 8.33 as per NAV of 43.96 on 30.09.22. If we attribute latest earnings of FY22 on fully diluted equity post issue, then asking price is at a P/E of around 41.29, if we take annualized FY23 earnings than P/E is around 35.93, which looks fully priced. As per RHP, peers comparison is shown above table. On BRLM's front, 5 lead managers are associated with this IPO, and have handled around 126 IPOs in last three fiscals.ICICI Securities Limited: This is 48th IPO from this BRLM. From last 10 IPOs, 4 opened below issue price and remaining opened above issue on the day of listing. As of now, 2 are trading below issue price and other are trading above issue price. ( As on 14.12.22)Kotak Mahindra Capital Company Limited: This is 34th IPO from this BRLM. From last 10 IPOs, 4 opened below issue price and remaining opened above issue on the day of listing. As of now, 1 is trading below issue price and other are trading above issue price. ( As on 14.12.22)J.P. Morgan India Private Limited: This is 8th IPO from this BRLM. From last 8 IPOs, 7 opened below issue price and remaining opened above issue on the day of listing. As of now, 2 are trading below issue price and other are trading above issue price. ( As on 14.12.22)IIFL Securities Limited: This is 35th IPO from this BRLM. From last 10 IPOs, 1 opened below issue price and remaining opened above issue on the day of listing. As of now, 1 is trading below issue price and other are trading above issue price. ( As on 14.12.22)Jefferies India Private Limited: This is 6th IPO from this BRLM. From last 5 IPOs, 1 opened below issue price and remaining opened above issue on the day of listing. As of now, 3 is trading below issue price and other are trading above issue price. ( As on 14.12.22) As per financials, KFin Technologies Limited has shown good growth, RoNW is 29.99% and P/E is respectively 41.29 and 35.93 as per FY22 and annualized FY23 earnings, which looks fully priced. Company is technology driven financial service platform provider and there is only one competitor in Indian Market (CAMS). We may see good growth in this sector as more financial awareness in Bharat. Performance of BRLMs are good. So, we give NEUTRAL rating for this IPO, one may buy for long term post listing after price is settled.
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