Block deal: KFin Technologies shares in focus on report General Atlantic may sell up to 10% stake today

Shares of KFin Technologies Ltd will be in focus on Friday morning as promoter entity General Atlantic is reportedly looking to sell 6.2 per cent stake in the company through a block deal. As per a report by ET NOW, the global private equity firm could sell an additional 3.8 per cent stake in KFin Technologies, in case of a strong response, increasing the total deal size to 10 per cent.

The floor price, as per the report, is set at Rs 490, which is 8 per cent discount to Thursday's closing price for the stock. The offer size is about Rs 515-833 crore and there is a 90-day lock-in. IIFL Securities is believed to be the broker to the deal.

Data showed General Atlantic held 49.12 per cent stake in KFin Technologies at the end of September quarter, through its entities such as General Atlantic Singapore Fund Pte and General Atlantic Singapore KFT Pte Ltd.

Ventura Securities initiated coverage on this stock on Thursday. It said KFin Technologies is showcasing a compelling investment opportunity, supported by significant growth in its domestic investor solution sector, an expanding presence in international markets, and a dominant role in the issuer solution domain.

"The integration of technology played a pivotal role in this advancement, enabling the development of products and platforms and reducing operational costs by minimizing opex. This technological leverage not only elevates client interaction but also boosts revenue from current clients and augments KFin Technologies' operational profitability," it said.

The brokerage suggested a price target of Rs 704 per share for the stock, representing an upside potential of 39 per cent in the next 24 months.

"Over FY23-26E, KFINT’s revenue/ Ebitda/ net earnings are expected to grow at a CAGR of 15.8 per cent/ 18.4 per cent/ 20.5 per cent to Rs 1,118 crore/ Rs 490 crore/ Rs 343 crore, respectively. Ebitda and net margins are expected to improve by 288 bps to 43.9 per cent and 346bps to 30.6 per cent, respectively. The implementation of technology-based solutions is effectively reducing costs, thereby enhancing profitability. Moreover, the dynamic nature of India's financial markets, combined with the company’s growing presence in international markets, offers significant potential for growth," Ventura Securities said.

"As a result, RoIC is expected to improve 2007 bps to 56 per cent, however, return on equity (RoE) is expected to decline 291 bps to 19.6 per cent. The firm is directing its cash flow towards business growth instead of dividend payouts, leading to a rapid increase in its net worth and affecting its RoE.," it said.

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