KFINTECHNSEQ4 FY26May 07, 2026

Kfin Technologies Limited

11,395words
61turns
12analyst exchanges
4executives
Management on call
Sreekanth Nadella
MD AND CEO
Vivek Mathur
WTD AND CFO
Amit Murarka
CFO INTERNATIONAL BUSINESS AND HEAD IR
Vedant Agarwal
IIFL CAPITAL SERVICES LIMITED
Key numbers — 40 extracted
rs,
bally, we should be among the top 5. And given much of the drive had been over the past 5 to 6 years, it augurs very well in terms of our market share expansion. So that's on the mutual funds, and we'
52%
uarter after quarter our market share expanding. At this point in time, we track to a little over 52% of the Nifty companies by market share in terms of market cap, by folios, it is about 45%, and by
45%
le over 52% of the Nifty companies by market share in terms of market cap, by folios, it is about 45%, and by the account, it is slightly lower. But in terms of the net new client addition, we've bee
15%
ty in terms of what are the new growth drivers, assuming a base case scenario of anywhere between 15% to 18% or 19% growth on the mature businesses. How do we then get past 20%? If you see our last
18%
erms of what are the new growth drivers, assuming a base case scenario of anywhere between 15% to 18% or 19% growth on the mature businesses. How do we then get past 20%? If you see our last 5 year
19%
what are the new growth drivers, assuming a base case scenario of anywhere between 15% to 18% or 19% growth on the mature businesses. How do we then get past 20%? If you see our last 5 years CAGR
20%
of anywhere between 15% to 18% or 19% growth on the mature businesses. How do we then get past 20%? If you see our last 5 years CAGR in terms of top line growth, we've been crossing 20% on a CAGR
11%
e the industry by a factor of 3. The overall pension subscribers in the industry have grown about 11% for the full year, including the last quarter. We have grown little over 34% and that basically
34%
y have grown about 11% for the full year, including the last quarter. We have grown little over 34% and that basically explains in terms of the superior technology solutions and the market share we
38%
eping a very distant third, fairly distant, if I may. 716 alternative investment funds, marking a 38% plus market share in the alternative investment funds continue to grow at a reasonable clip, both
23%
t's been a fairly stable performance, especially in the top line growth. We dropped a little over 23% year-on-year on the overall top line. And that includes Ascent, of course. And even excluding Asc
5%
se. And even excluding Ascent, we've grown a little around 11% thereabouts. EBITDA growth about 5% and margins have compressed and one would expect it to given we have added nearly -- on an annual
Guidance — 20 items
Sreekanth Nadella
opening
“We aim to cross -- we aim to get to close to 11,500 into this upcoming year, both in terms of the listed, unlisted and as well as our new focus to expand into the SME markets as well, right, in addition to being the single largest region with provider as well as a bond market provider.”
Sreekanth Nadella
opening
“If you see our last 5 years CAGR in terms of top line growth, we've been crossing 20% on a CAGR basis and we will have a quarter or two here and there, but by and large, we've been comfortable in accomplishing our own internal targets of 20% plus top line growth.”
Sreekanth Nadella
opening
“It will be anywhere around 900, 950 thereabouts.”
Sreekanth Nadella
opening
“EBITDA growth about 5% and margins have compressed and one would expect it to given we have added nearly -- on an annualized basis, little over $22 million of international revenue with little to no margin given the very early stage of the entity, but growing at a 30%, 35% top line growth.”
Sreekanth Nadella
opening
“The mutual fund industry AUM has still grown 21% and we expect a similar growth into this year as well on the back of a potential or a possible turnaround in the market, which we have not factored a whole lot.”
Sreekanth Nadella
opening
“So we're continuing to expand, as you could see the trend from FY22 to FY26, consistently from 30.3% to 32.5%.”
Sreekanth Nadella
opening
“Now this isn't necessarily a guidance, but as much as, I guess, our bottom-up projections internally, now these unlike in the past years, we will have to recalibrate, course correct nearly every month from here on, given everything that's happening in the market.”
Sreekanth Nadella
opening
“EBITDA, we expect it to be around 16% to 17% and a PAT little around 10% growth is what we expect to see into the coming year.”
Sreekanth Nadella
opening
“Now all of these factors no longer will be applicable now.”
Sreekanth Nadella
opening
“Hopefully, we will be in a position to beat the numbers that I just spoke about in the coming year as well.”
Risks & concerns — 12 flagged
Times like this, when we have pressure in the market overall, clearly, as much an impact there is on the mutual funds, there has been a certain amount of impact on the AIFs.
— Sreekanth Nadella
Now the margin compression this year was obviously largely on account of two important factors.
— Sreekanth Nadella
One obviously is the consolidation of accounts with Ascent, which we all knew that there was going to be a downstream drag into the overall margin.
— Sreekanth Nadella
With the other businesses growing much, much faster than the mature businesses, we should be able to have a much more diversified revenue and hence, much better managed risk profile as a business that we have today.
— Sreekanth Nadella
And as Sreekanth talked about, we are working on various cost optimization initiatives and to improve productivity, leveraging technology investment and AI, which is coming to play, which will help us in terms of sustaining these difficult times if the mark-to-market continues to behave in this volatile manner.
— Vivek Mathur
Because what I see is, I do see the portfolios are weak, but they're still reasonably okay and so are the transactions.
— Karthik Chellappa
But it looks like it's the realizations which have actually taken a bigger hit driving the decline.
— Karthik Chellappa
And when we acquired, we gave the guidance that you will have to be with us for 2 years, 3 years to see the impact of growth and operating leverage.
— Vivek Mathur
So as we grow Ascent business, the operating leverage will kick in to offset the impact of the amortization and depreciation of intangibles.
— Vivek Mathur
So clearly, there is no yield pressure, margin pressure for the asset management companies.
— Sreekanth Nadella
So the effect and the impact of all of these, you will start seeing the higher margin contribution.
— Sreekanth Nadella
We need to bear in mind that we are talking about the world's largest risk management platform on which close to $30 trillion, $40 trillion worth of stuff gets orchestrated.
— Sreekanth Nadella
Q&A — 12 exchanges
Q
Two questions from my side. The first one is just taking a cue from the comment that was made on the asset mix as far as the domestic MF business is concerned. If we were to assume that the metal mix is more or less stabilized, so if possibly even declining and if that were to be the case for FY27, can we say that our original expectation of domestic MF yields being down, let's say, about 4% to 5% year-on-year on a steady-state basis. Will that still hold true? Or are there any other variables that we should be keeping in mind? That's my first question.
Sreekanth Nadella
Good morning, Karthik. This is Sreekanth. I'll take that question. So the numbers that I spoke in terms of what our projections for the upcoming year assumes a continuation of similar asset mix as we have ended with the previous year. Though as I said, I do not necessarily believe that asset mix will be with ETFs almost at 23%. I believe the mix will be more in favor of actively managed funds this year. But in the base case of the numbers that I've said, we consider the continuation of ETFs to be around the same number. Excellent. And just to clarify, Sreekanth, your original guidance, which y
Q
Just to start off with a few clarifications. Now the number of new clients added in Ascent is about 62. I mean that's like 20% of what they had last quarter. So that's a big number, right? And what really changed in this quarter? And do you expect the run rate to carry forward?
Sreekanth Nadella
Absolutely, right? I mean the -- so again, just to put things into context, Ascent started about 5 years back. Today, they have -- the numbers are north of close to 800, 850-odd funds, and they're increasing by the day. So until and unless we are adding 70, 80, 100 funds every year, we wouldn't be getting this fast. So to that extent, I would expect the trend to be even faster into the coming quarters and years. The same issues we face in India are being faced everywhere in the world as well, right? I mean, so to that extent, despite a fairly distressed financial markets across the globe and f
Q
Can you hear me now?
Management
Q
Yes, that's it. So as we grow Ascent business, the operating leverage will kick in to offset the impact of the amortization and depreciation of intangibles.
Rajit Aggarwal
Understood. And is there a currency benefit in the top line of Ascent -- the top line growth of Ascent? So actual top line growth is 5%, but in INR, you will see about 8% growth. That's sequential Right, right. Sequential, we are talking about, yes.
Q
Sir, just one question. Any thoughts you would have on the TER changes...
Management
Q
Hello?
Management
Q
Sir, just one question. How are you reading the changes in the TER norms effective this year? And going forward, how are you anticipating the changes that will be passed on from the large MFs because most of them have been talking about managing the margins going forward. That would be helpful.
Sreekanth Nadella
Sure. Thank you. As we have given our narrative to the previous quarter, bulk of our contracts have been negotiated in the previous year, right? We have one each for this year and into the upcoming year. The negotiated contracts also bake into account the TER-driven reduction that the clients have been facing. And given that there is no net new impact that we have. But at the same time, please do bear in mind that the AMC results that you have seen in the past 3 days, 4 days, 5 days, so they're all operating with EBITDA margins up north of 60%, 65%. So clearly, there is no yield pressure, marg
Q
I have three questions, starting with the first one. Based on your guidance of 24%, 25% growth, 16%, 17% EBITDA growth, it seems like you're building in for an EBITDA margin of somewhere around 38%, 39% in FY27, including Ascent. Now previously, you had indicated that after Ascent integration also, you will hold on to a margin of somewhere around 40% at the EBITDA level. So just wanted to understand is there some new development that has happened because of which you moved that guidance? And secondly, just wanted to understand what all is included in the guidance. It seems like the guidance in
Sreekanth Nadella
Thank you, Supratim. So I'll address a few and I'll request Vivek to address a few of these. In terms of -- so first of all, it's not necessarily a guidance. As I said, we do not give formal guidance to the street in our projections. Basically, your math is right. I think you're looking at close to 39%-odd. We have estimated with a decent sense of conservatism coming from the hindsight of what happened in the past 2, 3 quarters in the markets. As you know, we are in a business which has a very, very strong connect to the market. And we cannot -- and even the range that we give, obviously, is s
Q
Just a few questions from my side. First, if I look at your presentation and you have broken up the revenue into various streams. If I look at the alternative private wealth and PMS revenue, whether I look at quarter-on-quarter or I look at year-on-year, there seems to have been a meaningful drop. And in conjunction with that, also the OPE revenues, which you classify, if I look at sequentially, there has been a decent drop. Even Y-o-Y, it looks flattish to down. I'm just talking from a 4Q perspective. So just wanted to get some color on what's really going on out here? Second, in terms of you
Sreekanth Nadella
Let me address the second question first, and then we can talk about the other things. I think the yield is obviously a factor of, as I said, multiple things. Part of that is pricing. Part of that is asset mix, right? I mean, in years where you have -- for example, crypto in the digital currency funds is one of the bigger basket of the total fund solution that we -- Ascent does. Now crypto, for example, have seen fluctuations up and down, and to a certain extent, that may either offset the goal with the growth of the yield of a more stable asset class or it can significantly enhance depending
Q
My first question is, if you could broadly indicate what were Ascent EBITDA margins in the fourth quarter? And, secondly related question is, the point around the depreciation or the amortization of intangibles, how do we think about the impact coming from there into FY27 and FY28 as well? And secondly, there was also a Labor Code impact that came in the fourth quarter, wherein what you've seen across most of the other companies and sectors is that everything was absorbed in the third quarter itself. So some clarification there would be helpful?
Sreekanth Nadella
Sure, Vivek do you want to comment on that?. Yes, I'll take that. So the Ascent Q4 margin was 8%. And what was the second question on the amortization that we have done. The amortization actually in KFin Singapore is valuation of the client contracts and brand against the goodwill that you pay and you get it externally valued, which is amortized over a period of 10 years. And that is something which is around INR6 crores, which is having an impact on the PAT, consolidated PAT when you merge KFin Singapore Ascent with KFintech. On the Labor Code, one-time impact, INR12.6 crores for the whole ye
Q
Just a couple of things. So we had launched the KRA business last to last quarter or it went live in the last quarter. Any update on that? Also, any update on the Aladdin platform integration that we had done? So any color on both these sides is something I was looking for. Thank you.
Sreekanth Nadella
Thank you, Uday. I'll take that. So the KRA platform, as you rightly said, went live late Q3, in fact, early Q4. So obviously, it's in early stages of business growth. We are extremely thrilled that in a very short period of time, we have closed contracts with a little over 25 asset management companies, large brokers, and have been chosen by AMFI to be the preferred partner in the objective of identifying the unclaimed assets that are lying in the country. This is an initiative from the Finance Ministry, given there is a significant amount of money that is held up in unclaimed money and then
Q
Thank you, everyone, for attending the conference. I just want to reiterate what Sreekanth mentioned, that we continue to work towards creating operating leverage. We are taking a hard look at all our costs and in terms of enablement of whatever investments we have done in technology to leverage that and working closely with Ascent to gain more market share and create that operating leverage in the international business. You will continue to see quarter after quarter the results of our integration with Ascent as they play out in terms of improving both the top line and the bottom line. Thank
Sreekanth Nadella
Thank you.
Speaking time
Sreekanth Nadella
15
Moderator
14
Vivek Mathur
11
Rajit Aggarwal
5
Abhijeet Sakhare
5
Karthik Chellappa
3
Jitark Shah
3
Dipanjan Ghosh
2
Vedant Agarwal
1
Supratim Datta
1
Opening remarks
Vedant Agarwal
Thank you so much, Iqra. Good morning, everyone, and welcome to the Q4 FY26 Earnings Conference Call of KFin Technologies Limited. Today from the company, we have with us Mr. Sreekanth Nadella, MD and CEO; Mr. Vivek Mathur, Whole-Time Director and CFO; and Mr. Amit Murarka, CFO, International Business and Head of Investor Relations and Mergers & Acquisition. I would now hand over the call to Vivek for his opening remarks. Thereafter, Sreekanth will share the key developments in the quarter. And after that, we'll open the floor for Q&A session. Thank you, and over to you, Vivek.
Vivek Mathur
Thank you, Vedant. I would request Sreekanth to give his opening remarks, and then I will cover the financial section.
Sreekanth Nadella
Excellent. Thank you. Thanks a lot, Vedant, for organizing this and for all the attendees, very good morning. Warm welcome to our Q4 results. You've seen the data. What I would do is over the next 15-odd minutes, walk you through in terms of how the quarter had gone by. By and large, you are now familiar with the numbers. Hopefully, we'll spend a little bit of time in terms of how we see the upcoming year, and then we'll speak about the financials and then a little bit of Q&A. You have the presentation with you. We kept the content familiar for you so that we don't have to spend too much time explaining as to what else. But by and large, a lot of metrics that we have been tracking to consistently for over the past 3 years since we went public, we've been in the uptick. We continue to be the single largest investor solution provider in India for mutual funds in the form of the number of asset management companies we manage. By AUM, of course, we are second contender. Now that is a refle
Vivek Mathur
Thank you, Sreekanth. On the financial performance, let me start with revenue. The overall revenue grew in the year at about 19.3%. And for the same quarter versus last year, it has grown by about 23%. If you look at excluding Ascent, it has grown for the same quarter versus last year by 4.6%. And if you look at sequentially; sequentially, there is a degrowth in terms of the overall revenue by 6.3% and excluding Ascent about 8.5%. That's mainly because of mark-to-market correction that happened in the second half of the year because of the geopolitical situation and movement of asset mix towards metals, such as gold and silver. And whatever was perceived as mark-to-market gains through -- coming through the mark-to- market movement in the overall AUM growth was a little offset by the mark-to-market losses on the equity side. So that resulted in a subdued performance. And also in the Issuer Solutions business, the corporate actions were tepid because of the geopolitical situation in the
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