Kaspi.kz: Strategic Leverage and Undervalued Potential in Underpenetrated Markets

Kaspi.kz (KSPI), Kazakhstan’s leading fintech and e-commerce platform, is sitting at a critical inflection point: its shares trade at a stark discount to global peers despite possessing operational leverage in payments/fintech, underappreciated synergies from its Turkish expansion, and a path to margin recovery as macro headwinds fade. For investors willing to look past near-term noise, this is a rare opportunity to buy a $13 billion fintech powerhouse at a P/E of 8x—far below the software industry median of 24.5x—while it builds a cross-border empire in two of Central Asia’s fastest-growing markets.

1. Payments & Fintech: A Margin Machine with Operational Gearing

Kaspi’s core payments platform is a profit engine. In Q1 2025, its TPV grew 23% YoY, with net income rising 21% due to operational leverage. Meanwhile, the Fintech segment—despite macro headwinds—posted 18% revenue growth, even as net income dipped to 8% due to higher provisioning (0.6% of Cost of Risk) from elevated interest rates.

This temporary drag is critical to note: if deposit rates normalize and macro provisioning eases, Fintech margins could rebound sharply. The company’s payments division, with its 17% transaction growth and 16% revenue growth, provides a stable base to fuel this recovery.

2. Turkey: A $1.1B Gamble with Multi-Year Upside

Kaspi’s $1.1 billion acquisition of 65.4% of Hepsiburada—Türkiye’s top e-commerce platform—has been misinterpreted as a risky bet. But this is a strategic masterstroke:
- Market Penetration: Hepsiburada’s 100M+ Turkish consumers unlock a $100B+ e-commerce market, underpenetrated by global players like Amazon.
- Synergies: Integrating Kaspi’s payments infrastructure with Hepsiburada’s logistics could create a cross-border Super App, enabling Kazakh SMEs to sell in Turkey and vice versa.
- Banking License: The pending acquisition of Rabobank A.Ş. (subject to regulatory approval) will allow Kaspi to offer deposit products in Turkey—a $1.9B asset play with high recurring revenue potential.

While Q1 2025 saw a $10M consolidated loss due to early-stage lending and political boycotts, these are speed bumps, not roadblocks. Turkey’s e-commerce penetration (still below 5% of retail sales) leaves vast room for growth, and Kaspi’s $650M Eurobond issuance ensures ample funding to navigate the transition.

3. Kazakhstan’s Regulatory Headwinds: A Temporary Drag, Not a Death Knell

Kaspi’s Marketplace GMV growth slowed to 20% YoY in Q1 2025, down from 62% in 2024, due to Kazakhstan’s new smartphone registration rules. This regulatory crackdown on gray-market imports—a temporary measure—masked a 64% surge in e-grocery GMV, a segment with higher margins and recurring customer engagement.

The company also faces deposit cost inflation (from 10%+ interest rates) and a proposed 10% tax on government securities, which together pressured its 2025 net income guidance to 15% growth (vs. 20% earlier). Yet these are short-term costs:
- Deposit Rates: If Kazakhstan’s central bank eases rates from current peaks (as inflation moderates), interest expense pressures will ease.
- Tax Uncertainty: The government may dilute the securities tax if it risks stifling liquidity in its own markets.

4. Valuation: A 60% Upside at $136/share—And That’s Conservative

Kaspi’s P/E of 8.2x (TTM) is 58% below the software industry median and 73% below its own 10-year average of 30x. This discount ignores its 21% revenue growth, 16% net income expansion, and the $136 GF Value implied by GuruFocus—a 65% premium to current prices.

Analysts’ $131.55 average price target (vs. $82/share) reflects consensus that the company’s payments/fintech duopoly in Kazakhstan and Turkish expansion are undervalued. Even a modest reversion to a 15x P/E—still below its historical average—would double its current valuation.

Conclusion: Buy the Dip—This Is a Decade-Long Play

Kaspi.kz is a compound-growth machine masked by temporary headwinds. Its payments platform dominance, Turkish expansion, and underpenetrated e-grocery segment create a triple tailwind for investors who can stomach near-term volatility. With $1.1B in cash, a fortress balance sheet, and a P/E that ignores its multi-market moats, this is a once-in-a-decade opportunity to buy a $100B+ fintech ecosystem at a 60% discount.

Action Items:
- Buy KSPI shares at current levels, targeting a $136 GF Value.
- Watch for: Regulatory approvals for Rabobank A.Ş., Kazakhstan’s deposit rate cuts, and Hepsiburada’s Q2 2025 performance.

The market is pricing in worst-case scenarios—but Kaspi’s strategy is built to win in the long run. This is not a bet on a quarter; it’s a bet on the future of payments and e-commerce in two of the world’s fastest-growing regions.

Disclaimer: Always conduct your own research and consult a financial advisor before making investment decisions.