Goldman Sachs' Strategic Rationale for Upgrading Kaspi.kz: A Case Study in Emerging Market Fintech Disruption and Capital Efficiency

Goldman Sachs' recent upgrade of Joint Stock Company Kaspi.kz (NASDAQ: KSPI) to "Buy" from "Neutral" reflects a nuanced understanding of emerging market fintech dynamics and capital efficiency. The firm's revised price target of $107, implying a 42% upside, is underpinned by Kaspi.kz's ability to navigate regulatory headwinds while leveraging its digital-first ecosystem to drive scalable growth. This analysis explores how Kaspi.kz's strategic expansion, capital efficiency metrics, and alignment with broader fintech trends position it as a compelling investment in the context of emerging market disruption.

Emerging Market Fintech Disruption: Kaspi.kz's Integrated Ecosystem

Kaspi.kz has emerged as a dominant fintech super-app in Kazakhstan, offering an integrated platform that combines payments, e-commerce, and financial services. By 2025, the company had captured 70% of the country's e-commerce market and processed transaction volumes exceeding Visa and Mastercard combined in Kazakhstan, according to Kaspi.kz's Q3 2025 earnings report. Its mobile-first strategy has achieved 11 million active users and 30% merchant adoption, according to a BeyondSPX analysis.

The firm's expansion into Turkey through the acquisition of Hepsiburada-a major e-commerce player-signals its ambition to replicate its Kazakh success in a larger market. This move not only diversifies Kaspi.kz's revenue streams but also accelerates its growth trajectory, with Goldman Sachs projecting 21% average EPS growth from 2026 to 2029, driven by higher-yield deposit products and fintech margin expansion, according to an Investing.com article. Such strategic acquisitions underscore Kaspi.kz's ability to scale its ecosystem while mitigating risks associated with market saturation in its home country.

Capital Efficiency: A Competitive Moat

Kaspi.kz's financial performance highlights its exceptional capital efficiency. The company's Return on Invested Capital (ROIC) of 41.90% far exceeds its Weighted Average Cost of Capital (WACC) of 4.77%, reflecting its ability to generate outsized returns from its digital infrastructure, per a FinancialModelingPrep report. This efficiency stems from its integrated ecosystem, which leverages transactional data to offer high-margin services such as consumer loans, buy-now-pay-later (BNPL), and B2B solutions like "Buy-Inventory-Now-Pay-Later" for merchants - a point also highlighted in the BeyondSPX analysis mentioned above.

Goldman Sachs' upgrade acknowledges Kaspi.kz's disciplined capital allocation, particularly in the face of regulatory costs and elevated interest rates. Despite these challenges, the firm reported a 55% revenue increase in H1 2025, driven by Hepsiburada's acquisition and robust operating cash flow (Kaspi.kz's Q3 2025 earnings report). Kaspi.kz's ability to maintain operating profit margins above 50% historically further reinforces its profitability relative to peers, making it a rare example of scalable, capital-efficient growth in emerging markets (Kaspi.kz's Q3 2025 earnings report).

Alignment with Goldman Sachs' Fintech Thesis

Goldman Sachs' broader fintech strategy emphasizes technologies that enhance capital efficiency and financial inclusion. The firm has invested $500 million in fintech ventures and leverages AI to improve trade execution efficiency by 15% through platforms like Atlas, according to a Quant Intelligence report. Similarly, Kaspi.kz's use of AI-driven credit decisions and blockchain-enabled transaction transparency aligns with these priorities, enabling faster service delivery and reduced operational costs (the Investing.com article cited earlier).

The firm's research also highlights the transformative role of fintech in emerging markets, where digital solutions bridge gaps in financial access. Kaspi.kz exemplifies this trend by providing affordable services to underserved populations in Kazakhstan and Turkey, mirroring the success of Latin American fintechs like Nubank (the FinancialModelingPrep report cited above). Goldman Sachs forecasts that such innovations will drive stronger economic growth in emerging markets compared to developed economies, a dynamic Kaspi.kz is well-positioned to capitalize on (the BeyondSPX analysis cited above).

Risks and Considerations

While Kaspi.kz's growth prospects are compelling, challenges remain. Regulatory scrutiny in Kazakhstan and Turkey could impact profitability, particularly as non-performing loans (NPLs) rise post-acquisition (Kaspi.kz's Q3 2025 earnings report). Additionally, competition in Turkey's e-commerce sector may pressure margins. However, Kaspi.kz's technological moat and capital efficiency provide a buffer against these risks, enabling reinvestment in innovation and customer acquisition.

Conclusion

Goldman Sachs' upgrade of Kaspi.kz reflects confidence in its ability to navigate emerging market complexities while delivering capital-efficient growth. By combining a digital-first ecosystem with strategic expansion and AI-driven operations, Kaspi.kz aligns with the firm's fintech thesis of leveraging technology to drive financial inclusion and profitability. As the company prepares to release Q3 2025 earnings on November 10, investors may view this upgrade as a catalyst for re-rating, particularly if interest rates decline and fintech margins rebound.