CAMS vs KFin Technologies: Is KFin Tech’s valuation really justified?

India’s registrar and transfer agent (RTA) industry is essentially a duopoly, dominated by Computer Age Management Systems (CAMS) and KFin Technologies. CAMS controls about 68% of the market and trades at a P/E of 39x, while KFin Tech holds the remaining 32% and trades at 56x. Despite CAMS’s clear leadership, the market values the two quite differently.

Let’s understand why.

First, what exactly do RTAs do?

At its core, an RTA (Registrar and Transfer Agent) handles the operational and compliance-heavy tasks for fund houses, acting as the backbone of the mutual fund industry.

For Fund Houses (AMCs), RTAs handle:

• Processing all investor transactions such as Systematic Investment Plans (SIPs), Systematic Withdrawal Plans (SWPs), and Systematic Transfer Plans (STPs).
• Maintaining complete and accurate investor records.
• Providing transaction support tools to mutual fund distributors.
• Offering customised reporting, insights, and data analytics to AMCs.
• Ensuring strict compliance with SEBI regulations.

For investors, RTAs take care of:

• Know Your Customer (KYC) formalities and onboarding into mutual funds.
• Managing dividend payouts from companies.
• Issuing the Consolidated Account Statement (CAS) that summarises all your mutual fund holdings in one place.
• Updating important details such as bank account, nominee details, etc.
• Resolving your transaction-related queries or grievances efficiently.

But why don't AMCs do this in-house?

The answer to this question is actually their competitive edge. As per regulations, every AMC must either work with a SEBI-registered Registrar and Transfer Agent (RTA) or manage those functions in-house. But running an in-house RTA is costly and compliance-heavy, which makes it impractical for most fund houses. Independent RTAs, on the other hand, operate at scale, serving multiple AMCs, which allows them to spread fixed costs over a larger base and reduce the cost per transaction. Their strong track record in ensuring error-free transactions has also built deep trust with AMCs.

As a result, RTAs have become a key part of India’s capital market infrastructure. With 44 AMCs already active and more expected to enter, they free fund houses from back-office work, letting them focus fully on core investment management operations, all at a much lower cost than running the function in-house.

Market share of these companies

CAMS and KFin Technologies together control the entire RTA market for mutual funds. CAMS leads with about 68% market share, whereas KFin Tech holds the remaining 32%. More importantly, CAMS serves 10 of the 15 largest mutual fund houses (based on AUM), including the top 3: SBI MF, ICICI Prudential MF, and HDFC MF, giving it a clear edge in the industry.

How do they earn revenue? 

In FY25, CAMS reported revenue of ₹1,422 crore, compared with ₹1,090 crore for KFin Technologies. Non-mutual fund businesses made up ₹184.8 crore (13%) of CAMS' revenue and ₹316 crore (29%) of KFin Tech’s revenue. These non-mutual fund streams include National Pension Scheme (NPS) record-keeping, insurance and fintech back-end services, corporate registry and IPO support, services to Alternative Investment Funds (AIFs), Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), software licensing and digital infrastructure, and global fund administration, where KFin has a hold.

 

Why does non-MF revenue matter so much for RTAs?

The core mutual fund RTA business is under structural pressure. As industry AUM rises, the effective fee earned by RTAs keeps shrinking. This happens because RTAs charge fees as a percentage of a fund’s AUM. But as the AUM grows, SEBI rules require the fund’s Total Expense Ratio (TER) to fall. Since all operating costs, including RTA fees, are covered within the TER, the payout to RTAs declines with a lower TER as the fund size increases.
 

At the same time, Exchange Traded Funds (ETFs) now account for 13% of the mutual fund industry’s AUM (as of March 2025), up from 7% in 2020. Since ETF units are held and settled in demat through depositories and authorised participants, they require far less RTA support, which limits their role and revenue potential.

Why is KFin Tech trading at a higher P/E than CAMS?

When KFin first hit the market, it traded at lower P/E multiples than CAMS. Over time, however, its valuation increased. Today, 29% of KFin’s revenue comes from non-mutual fund segments, more than double of CAMS’ 13%, and that's where the P/E re-rating started. KFin is trying to position itself as a tech-first company, launching new products every year and expanding into international markets. It has acquired five foreign subsidiaries to drive inorganic growth. These moves have led the market to view KFin more like a SaaS-driven business than a pure-play RTA. 

But is that premium valuation truly justified?

In our opinion, it's not really justified. Only 29% of KFin Tech’s revenue currently comes from non-MF services, which isn’t enough to value it like a tech or SaaS company. The market seems too quick to award it that kind of premium. 

You don’t need a “diversified” business when you can diversify easily at the portfolio level. What really matters is category leadership and deep expertise, and on that front, CAMS is the clear winner.

Conclusion

CAMS clearly leads across key segments, holding the number one spot in mutual fund RTAs, GIFT City AIFs, and insurance repository, while also maintaining the top 2nd position in Central KYC and eNPS Registrations. While KFin Technologies is trying to diversify, in a business where scale, trust, and category dominance matter most, CAMS has a solid advantage, which makes KFin’s higher valuation hard to justify.

Finology is a SEBI-registered investment advisor firm with registration number: INA000012218.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.