Tight Regulations And Rising Costs Will Restrict Future Upside

Key Takeaways

• Exposure to regulatory changes, rising funding costs, and new taxes threatens Kaspi.kz's margins, revenue stability, and long-term profitability.
  
• International expansion faces significant risks amid political instability, early fintech losses, and difficulty replicating the domestic business model.
  
• The Super App strategy, ongoing digital adoption, and international expansion position Kaspi.kz for accelerated growth, improved profitability, and strengthened market leadership across its core and new markets.

Catalysts

Provides payments, marketplace, and fintech solutions for consumers and merchants in Kazakhstan, Azerbaijan, and Ukraine.

• Strict government regulations and registration requirements for smartphones have resulted in significant price increases and a collapse in demand for a key e-commerce category representing roughly one-fifth of Kaspi.kz's e-commerce GMV. This disruption is not only dragging down current revenues but exposes Kaspi.kz's marketplace to material volatility due to its reliance on discretionary goods, which could undermine medium-term revenue and earnings stability.
  
• Persistent high interest rates in Kazakhstan and the need to continually raise deposit rates to attract funding have driven funding costs up between 100 to 150 basis points in just a single year. These elevated costs are forcing Kaspi.kz to repeatedly reprice its entire deposit portfolio, leading to margin erosion and compressing net income at precisely the time when regional economic growth is slowing.
  
• The emergence of new government policies, including the near-certain implementation of a 10% tax on investment income and an increase in mandatory National Bank reserves, will structurally reduce Kaspi.kz's bottom-line profitability and tie up capital in non-yielding assets, directly cutting into net margins for years to come.
  
• Gradual but irreversible attrition in payments take rates-driven by the rapid scaling of lower-margin products like Kaspi Pay and B2B payments-ensures that, even as transaction volumes rise, the portion of revenue per transaction will keep declining. This sector-wide trend will systematically erode the profitability of Kaspi.kz's core payments segment, leading to muted future revenue growth.
  
• Expansion risks into international markets like Turkey remain poorly controlled; the company's $300 million investment is being made amid acute political and consumer volatility, with concurrent early-stage fintech loan losses, regulatory approval delays, and potential misalignment with local partners. Without proven execution, Kaspi.kz faces high probability of failing to replicate its domestic model, exposing the group to earnings dilution, margin contraction, and increased risk of capital misallocation.

Kaspi.kz Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more pessimistic perspective on Kaspi.kz compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts.
• The bearish analysts are assuming Kaspi.kz's revenue will grow by 12.8% annually over the next 3 years.
• The bearish analysts assume that profit margins will increase from 38.2% today to 40.9% in 3 years time.
• The bearish analysts expect earnings to reach KZT 1646.9 billion (and earnings per share of KZT 8458.11) by about June 2028, up from KZT 1072.2 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 7.2x on those 2028 earnings, down from 8.0x today. This future PE is lower than the current PE for the US Consumer Finance industry at 9.0x.
• Analysts expect the number of shares outstanding to grow by 0.4% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.45%, as per the Simply Wall St company report.

Kaspi.kz Future Earnings Per Share Growth

Risks

• Kaspi.kz is benefiting from rapid secular growth in digital payment, e-commerce, and fintech adoption across Kazakhstan and Central Asia, which supports long-term revenue and user base expansion as these trends are expected to continue for years.
  
• The company is seeing strong growth in e-Grocery and other marketplace businesses, with GMV in new verticals growing at rates above 50% year-on-year, indicating that the integrated Super App strategy is successfully driving upsell, cross-sell, and customer stickiness, which should support net income and revenue growth.
  
• Despite currently high funding costs and interest rates, management expects the rate environment to eventually revert, which would immediately improve net margins and profitability by reducing the cost of deposits and funding – flipping a current headwind into a future tailwind for earnings growth.
  
• Geographic expansion through investments and acquisitions (notably in Turkey and with Rabobank) opens new large addressable markets; if successful, this could accelerate scalable revenue growth, international diversification, and further margin expansion over the long term.
  
• The ongoing shift to formal digital transactions, increased regulatory transparency, and rising take rates from value-added services in payments and marketplace businesses further reinforce Kaspi.kz's ability to capture greater market share and drive stronger-than-expected long-term revenue and net profit growth.

Valuation

• The assumed bearish price target for Kaspi.kz is KZT91.06, which represents the lowest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Kaspi.kz's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of KZT138.07, and the most bearish reporting a price target of just KZT91.06.
  
• In order for you to agree with the bearish analysts, you'd need to believe that by 2028, revenues will be KZT4026.5 billion, earnings will come to KZT1646.9 billion, and it would be trading on a PE ratio of 7.2x, assuming you use a discount rate of 9.5%.
  
• Given the current share price of KZT88.22, the bearish analyst price target of KZT91.06 is 3.1% higher. The relatively low difference between the current share price and the analyst bearish price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.