Jefferies retains 'buy' on KFin Tech, sees more than 22% upside – key reasons
KFin Technologies (KFin) have risen 25 percent to currently trade at ₹457 from its IPO price of ₹366. On the back of strong returns and bullishness of the management over their overseas expansion plans, brokerage house Jefferies has retained its ‘buy’ call on the stock and raised its target price to ₹560 from ₹500 earlier. The new target implies a potential upside of over 22 percent.
"Our interactions with K-Fin’s CEO point to progress in expanding client base in overseas markets where they are positioned well in Malaysia, Thailand, and the Philippines and beefing up for Singapore and Hong Kong. While the Asian market will be organic, it may explore M&A in the Western market. Domestic MFs and issuer solutions are growing at a steady pace," it said.
The brokerage also raised its earnings estimates by 1-2 percent and sees a 17 percent CAGR in profit over FY23-26. It also expects a revenue CAGR of 13 percent and an average EBITDA margin of 42 percent. Cashflows can aid mergers and acquisitions (M&A), it added.
In 2023 YTD, the stock has advanced almost 33 percent, giving positive returns in 6 of the 10 months so far this year. The stock shed around 3 percent in October so far, snapping gains after 6 straight months of positive returns between April and September. In that period, it jumped over 67 percent.
However, it shed the most in January and February, down over 7 percent in each. The stock also hit its record high of ₹493.25 earlier this month on October 3 but has consolidated a bit since hitting its peak. It is currently a little over 7 percent down from its all-time high.
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