KFin Tech surpasses CAMS in mcap: Is the market overhyping its diversified revenue stream?
Subscribe to enjoy similar stories. Shares of KFin Technologies Ltd hit a new lifetime high of ₹1,620 apiece on Thursday, marking a meteoric rise from its lacklustre debut in December 2022 at ₹364, slightly below its public issue price of ₹366. The stock has more than quadrupled since then, a sharp reversal after languishing below its issue price for nearly six months.
What has sparked this dramatic turnaround? Perhaps, the market's realization that KFin’s business as a registrar and transfer agent (RTA) offers a proxy play on the mutual fund (MF) industry. With only two dominant players—KFin and Computer Age Management Services Ltd (CAMS)—the sector presents a significant growth opportunity. Notably, KFin’s market capitalization has now surpassed that of CAMS, which services over two-thirds of the total MF industry’s assets under management (AUM).
Since KFin’s listing, its shares have surged 300%, compared to CAMS’s relatively modest gains of 100%. Is this surge justified? Before taking a view on that, investors should note the fundamental difference in the revenue streams of both companies. KFin’s revenue stream is more diversified than that of CAMS.
For FY24 and H1FY25, domestic MF operations accounted for about 70% of KFin’s total revenue, compared to CAMS’s higher dependency at 87% during the same period. Note that, KFin’s diversification stems from its exposure to the international MF business and its strong presence in the domestic corporate registrar segment. Read this | A lot has to fall in place for IDFC First Bank’s stock to rebound Though KFin’s non-domestic MF business growth rate is strong at 23% in H1FY25, the current boom in domestic MF overshadows it with 37% growth in its domestic MF business.
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