Axis Capital has initiated coverage on key capital market infrastructure players including Kfin Technologies Ltd (KFin Tech), Computer Age Management Services Ltd (CAMS), National Securities Depository Ltd (NSDL), and Central Depository Services (India) Ltd (CDSL), highlighting their structural advantages and long-term growth potential.

The domestic brokerage believes, "Market infrastructure/utility players offer a superior play on Indian capital markets as they gain from stable growth, mature market structures with high barriers to entry, strong operating leverage on a low-cost model, and emerging optionality from new businesses."

Axis noted that different segments offer varied growth levers. "Exchanges offer a play on India's large equity derivatives market and an indirect play on long nominal GDP growth runway. Depositories (DPs) gain from growing household equity penetration and offer a more stable and diversified revenue-mix. RTAs (Registrar and Transfer Agents) are a proxy play on rising MF penetration with some international optionality. We prefer RTAs given their better earnings visibility, lower regulatory risks, and reasonable valuations."

The brokerage highlighted KFin Tech's strong growth trajectory. "KFin benefits from faster-growth (17 per cent CAGR), led by strong growth in international business (~25 per cent CAGR) and better growth in MF AUM due to a client-mix skew towards small and mid-sized AMCs. CAMS, despite its lower MF yields due to large-AMC concentration, offers stability through dominance (~67 per cent MF AUM share) and rising non-MF contribution led by CAMS Pay and alternatives. RTAs' earnings will outpace top line (22 per cent CAGR) as margins gain from operating leverage," the brokerage also said.

Axis has assigned 'Buy' ratings to KFin Tech and CAMS, with target prices of Rs 1,200 and Rs 850, respectively. "KFIN has the strongest earnings outlook (27 per cent CAGR) in the infra space with international optionality; CAMS is a play on domestic MF growth, with attractive risk-reward at current valuations," it stated.

Meanwhile, the brokerage has given 'Add' ratings to depositories NSDL and CDSL, with target prices of Rs 1,000 and Rs 1,425, respectively. "We initiate on CDSL/NSDL with ADD – reflecting high-quality, annuity-led franchises, but with measured upside due to margin headwinds, regulatory pricing impact (KYC), and moderation in issuer-led growth," Axis Capital said.