Kfin Technologies Limited — Q2 FY26 earnings call

Call held 28 Oct 2025

Management summary

KFin Technologies delivered a resilient Q2 FY26, marked by strong sequential revenue growth and the strategic closure of the Ascent acquisition. While headline margins saw some transitory pressure from labor resets and one-time professional charges in Issuer Solutions, the core business continues to outpace industry growth. Management is pivotally shifting towards international fund administration and AUM-based pricing in pensions to drive long-term value.

Highlights

  • Revenue reached ₹309 crores in Q2, representing 10.3% YoY growth and 12.8% sequential growth.

  • EBITDA margin stood at 43.9% for Q2 and 42.8% for H1 FY26, despite one-time M&A and professional costs.

  • Completed the acquisition of Ascent Fund Services in Singapore for ₹308 crores, significantly expanding global footprint.

  • Domestic mutual fund business grew 10.2% YoY, while the core business (excluding GBS) grew 26.1% YoY.

  • Issuer Solutions added ~500 clients in Q2 and successfully handled the country's largest IPO (LG).

  • AIF business crossed ₹1.8 trillion in AUM, with management targeting 50% market share in 12-18 months.

  • NPS business grew 21% YoY, with a transition to AUM-based pricing expected to be margin accretive.

Key financials

  1. Revenue ₹309 Cr +10.3%YoY
  2. EBITDA Margin 43.9%
  3. PAT Margin 30.2%
  4. Diluted EPS ₹5.38 +20.8%QoQ
  5. Cash and Cash Equivalents ₹413 Cr -40.2%QoQ

What they filed

Q1 FY27: revenue up 8.7%, net profit up 5.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue269 282 274 264 297 +10%313 +11%284 +4%287 +9%
EBITDA123 131 117 110 130 +6%147 +12%120 +3%115 +5%
Net profit85 91 81 76 91 +7%94 +3%85 +5%80 +5%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Domestic Mutual Fund
    10.2% Revenue Growth5.2% VAS Revenue Share
  • Issuer Solutions
    13.4% Revenue Growth500 New Clients Added
  • International and Other Investor Solutions
    7.1% Revenue Growth26.1% Core Business Growth (ex-GBS)

Guidance & targets

Margin

  • EBITDA Margin Band Margin · FY26 · High confidence 40% to 45%
    our guidance holds good in terms of EBITDA margin of 40% to 45%.

    — Vivek Mathur, CFO

Market Share

  • AIF Industry Market Share Market Share · next 12 to 18 months · High confidence 50%

    From 40% today

    we are confident we will get close to 50% into the next 12 to 18 months.

    — Sreekanth Nadella, MD and CEO

Revenue

  • Telescopic Pricing Yield Compression Revenue · Annual · High confidence 3.5% to 4%
    You will continue to see telescopic-based pricing reduction in yield of about 3.5% to 4% every year as the AUM goes up.

    — Vivek Mathur, CFO

Market context

  • Ascent EBITDA Margin Profitability · FY27 · Medium confidence Double-digit

    From Breakeven today

    we have a very strong plan -- operating plan to get into double-digit margins into the next year.

    — Sreekanth Nadella, MD and CEO

Risks & concerns

  • KRA Industry Interoperability

    medium

    Regulatory changes allowing AMCs to avoid paying for records could be a 'net negative' for the KRA industry revenue.

    Both acknowledged

  • GBS Business Decline

    medium

    GBS revenue degrew by 70% in Q2, acting as a drag on the overall International segment growth.

    Management acknowledged

  • Telescopic Pricing Yield Compression

    low

    Annual yield reduction of 3.5-4% is baked into the business model as AUM scales.

    Management acknowledged

Areas of evasion (1)

  • Specific basis point numbers for the new NPS pricing structure were withheld as they are still being finalized with the regulator.

Q&A highlights

2 direct
Issuer Solutions Margin Compression Direct
One is, since there have been so many new IPOs... our labor costs are basically semi-linear... Two, we have incurred certain professional charges... in terms of vetting the transactions [unclaimed shares] that we're clearing.

Explains that the margin dip is transitory and linked to high IPO activity and regulatory vetting of old physical share claims.

Asked by Karthik Chellappa

International vs Domestic Revenue Mix Direct
I don't see a scenario where the international business will overtake domestic in the next 2 to 3 years... but I would be surprised if it won't happen in 5-year horizon around that.

Sets a long-term strategic timeline for the company's transformation into a global fund administrator.

Asked by Shrenik Mehta

NPS Pricing Structure Change Partial
there is also intent... a requirement to move into a basis point-based pricing... it is going to be accretive margin-wise because it does not come with additional costs.

Highlights a significant regulatory tailwind that shifts pension revenue from a flat fee to an AUM-linked model, improving margins.

Asked by Uday Pai

2 min read 5 chapters

Detailed narrative

Strategic Pivot to Global Fund Administration

KFintech is aggressively pursuing its vision to become India's first large global fund administrator. The completion of the Ascent Fund Services acquisition in Singapore marks a critical milestone, giving the company a presence in 18+ countries. Management expects international business, currently growing at 30%+, to potentially overtake domestic revenue within a five-year horizon as they leverage cross-sell and upsell opportunities across the combined entity.

Transitory Margin Pressures in Issuer Solutions

The Issuer Solutions segment saw margin compression in Q2 due to two primary factors: a 'semi-linear' reset in labor costs to handle a surge in new IPO mandates and one-time professional charges for vetting high-risk claims related to old physical shares. Management views these as transitory, expecting margins to return to historical levels within 2-3 quarters as the cost per mandate stabilizes and vetting activities conclude.

Regulatory Tailwinds in Pension (NPS) Business

A significant shift is underway in the National Pension System (NPS) business, moving from a flat fee per account (capped at ₹100) to an AUM-based or corpus-based fee structure. This change is expected to be margin accretive as it decouples revenue from headcount and links it to the growing pension corpus. KFintech, currently the fastest-growing CRA with a 10.3% overall market share, is well-positioned to benefit from this 'basis point-driven' charging model.

Technology-Led Productivity Gains

KFintech continues to invest heavily in technology, with IT spending maintained at ~18% of revenue. The 'FinEx' program, aimed at replatforming the 40-year-old core tech stack, has seen 2 of 16 modules go live. This digital transformation has already allowed the company to double transaction volumes in domestic mutual funds with only a 15% increase in headcount, demonstrating significant operating leverage.

Alternative Investment Funds (AIF) Momentum

The AIF segment remains a high-growth engine, with AUM crossing ₹1.8 trillion and revenue growing at 28% YoY. KFintech currently manages close to 40% of the industry and is confident of reaching 50% market share within the next 12-18 months. The migration of 80% of funds to the new 'XAlt' platform is expected to further drive scale-driven efficiencies and margin expansion in this fledgling asset class.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Financial Services earnings calls