KFin Technolog.

KFin Technologies reported a 19.3% YoY revenue growth for FY26 and 23% YoY for Q4 FY26. However, the company experienced a sequential revenue degrowth of 6.3% QoQ (8.5% excluding Ascent) in Q4. KFin maintained its position as the single largest investor solution provider for mutual funds by AMC count and expanded its market share in Issuer Solutions to over 52% of Nifty companies by market cap. The company won 4 new asset management mandates and aims to service 5 out of the top 10 fastest-growing AMCs in the next 1-2 quarters.

The international business is a key growth driver, with management targeting over 70% overall and 60% organic revenue growth for FY27. The acquisition of Ascent Fund Solutions in October FY26 added 499 fund manager clients (900-950 funds) and contributed 15% to Q4 revenue. While Ascent's Q4 EBITDA margin was 8% and amortization of INR6 crores per quarter from acquired intangibles impacted consolidated PAT, management expects these to improve as integration synergies play out over coming quarters.

The Issuer Solutions segment, contributing 10% to Q4 revenue, faced headwinds including a 'mass exodus' of retail investors leading to a loss of 1.7 million folios and tepid corporate actions in Q4. This resulted in a revenue drop for the segment. However, KFin added 740 new clientele, expanded market share by 80 basis points, and successfully transitioned Punjab National Bank. Management anticipates a rebound with several large IPOs, including Jio, expected in the coming 1-2 quarters, which should drive growth into the higher 20% range.

The domestic mutual fund business, accounting for 61% of Q4 revenue, saw AUM grow 21% in line with the industry. However, mark-to-market erosion and a shift towards passive/metal ETFs (silver and gold) led to a 200 basis point decline in equity asset mix over the last two quarters, impacting yields. Management noted early April trends indicate a reversal, with actively managed funds expected to regain share, which should improve yields and revenue. SIP growth remains strong, with KFin holding over 37% market share in this area.

The Pensions business has broken even and outpaced industry growth by a factor of 3, growing 34% for the full year compared to the industry's 11%. KFin has also transitioned to a basis-point pricing model for pensions, aligning with AUM growth. The Alternative Investment Funds (AIF) segment saw substantial growth, with the number of funds increasing from 593 to 741, marking a threefold increase. AIF AUM grew 19%, and margins remained strong at over 37%, despite mark-to-market erosion affecting Cat III funds.

For the coming year, KFin provided a conservative outlook, targeting 23-24% top-line growth, 16-17% EBITDA growth, and approximately 10% PAT growth. This guidance assumes a continuation of current market conditions. Management is actively focusing on cost optimization and tightening discretionary spending to protect its long-term EBITDA margin target of 40-45%. The one-time^📎 Labor Code impact of INR12.6 crores in FY26 will not recur in FY27, which is expected to aid PAT growth.