KFin Tech up 9% in 2 days post Q3 results; brokerages remain divided

KFin Technologies' share price gained 6 per cent on BSE, logging an intra-day high at ₹1,061.4 per share. The stock gained for the second straight session, rising over 9 per cent in two days. The stock was in demand after the company posted healthy Q3FY26 results on Friday, after market hours.

 

In the December quarter (Q3FY26), Kfin Technologies consolidated net profit stood at ₹91.993 per share, compared to ₹90.178 crore a year ago, up 2 per cent. Its revenue from operations stood at ₹370.87 crore, as compared to ₹290 crore a year ago. 

 

The company’s Earnings before interest, tax, depreciation and amortisation (Ebitda) stood at ₹151.62 crore, compared to ₹130.55 crore year-on-year (Y-o-Y). Ebitda margin stood at 40.9 per cent, as compared to 45 per cent. Check KFin Technologies detailed result here.

 

Brokerage's view on KFin Technologies

Motilal Oswal Financial Services has maintained a ‘Neutral’ rating on the stock. However, the brokerage has trimmed the target to ₹1,110 from ₹1,210, as the performance was marred by margin contraction and a miss on profitability. While the Ascent acquisition provided a significant revenue boost, it was not materially profitable this quarter, causing Earnings before interest, tax, depreciation and amortisation (Ebitda) margins to slide to 40.9 per cent from 45 per cent a year ago. 

 

Furthermore, a 37 per cent surge in operating expenses and a one-off labor code impact led to a 7 per cent miss in net profit compared to estimates. Although the brokerage expects a healthy 20 per cent earnings compound annual growth rate (CAGR) over FY26–28, it remains cautious as the integration of international business is currently diluting margins, and the stock's premium valuation at 35x FY28E earnings leaves limited room for further upside.

 

On outlook, Motilal Oswal said structural tailwinds in the mutual fund industry should support strong absolute growth in KFin Technologies’ MF revenue. It highlighted KFin’s differentiated platform-as-a-service offering, a technology-driven and asset-light model, rising contribution from non-MF segments, and the integration of global fund administration capabilities through Ascent as key positives that position the company well for opportunities in both India and overseas markets. 

 

The brokerage has largely maintained its earnings estimates while factoring in the Ascent acquisition and expects revenue/Ebitda/profit after tax (PAT) CAGR of 20 per cent/19 per cent/20 per cent over FY26–28E.  Further, according to reports, Citi has maintained 'Buy' and raised target price of ₹1,385 from ₹1,335. The brokerage said that the company reported a solid Q3 with core profit before adjusted tax (PBAT) up 12 per cent quarter-on-quarter (Q-o-Q) (non-Ascent); adjusted Ebitda margin 42 per cent.  However, mutual fund (MF) yield drags remained persists due to unfavourable mix. Lower MF AUM yields led to earnings pressure. Meanwhile, mon-MF businesses stayed strong with AIF/PMS, MAAM, AUM services and NPS scaling well. Citi cut FY26E earnings per share (EPS) estimates by 10 per cent to reflect lower MF yields, FY27–28E eastimates were largely retained.

 

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