Kellton Tech Solutions (NSE:KELLTONTEC) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the KELLTONTEC Solution Limited Q1 FY 'twenty seven Earnings Conference Call. As a reminder, all participant lines will be in a listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes.. Would like to thank you all for participating in the company's earnings call for the first quarter of financial year twenty twenty seven. Before we begin, I would like to mention a short cautionary statement. Some of the statements made in today's call may be forward looking in nature, and such forward looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated.

0:48 Such statements are based on management's beliefs as well as assumptions made from the information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward looking statements in making any investment decisions. The purpose of today's earnings conference call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Now I would like to introduce you to the management participating with us in today's earnings call. We have with us mister Niranjan Chintham, chairman and hold time director mister Karanjit Singh, chief executive officer, India, and mister Srinivas Pottluri, chief executive officer, US.

1:34 I would now like to turn the conference call over to Mr. Niranjan Chintam, sir. Thank you, and over to you, sir. Thank you, Sagar. Good evening, good morning, good afternoon, wherever you are dialing in from. Thank you for joining our Q1 FY 'twenty seven earnings call. Just want to start off with the financial highlights, and then I'll hand over to Karanjit to talk about operational and customer wins. So the financial numbers, we have achieved $3.16 crores, which is about close to 7% year on year growth, with an EBITDA of 11.1%, the EBITDA absolute number being INR 35 crores and a PAT margin of 7.1% and the PAT absolute number being INR22.3 crores.

2:24 The EPS for this quarter is INR42.5 crores up. So these are the highlights from a financial point of view. Let turn the that we have got this quarter. Karanjit, over to you. Hello? Yeah, Karan. Good evening. Good evening, everyone. So let me just first go through the client wins during this quarter. So we've had some significant wins. So I'll just go over one one by one. So this... The first one is a Fortune India 500 conglomerate. It's a big conglomerate. And we have a strategic engagement with them to basically build a unified enterprise workflow platform, and we are leveraging our local local platform to basically deliver the solution. So this will actually help them modernize their financial and governance processing. And, of course, you know, it's highly configurable and, of course, integrates with multiple systems that they have. And, eventually, it will lead in to the AI assisted process automation as well.

3:38 The second one is a leading UAE enterprise group. Here, we are basically designing a cloud native enterprise operating system that helps unify their business operations, governance, finance, and enterprise workflows. Again, you know, this will have some API led integration as well as AI driven operational insights and intelligent automation. Obviously, all to support the business decision making. The third one that I have is a leading energy infrastructure company in The Middle East. We are helping them basically build an enterprise workflow platform that helps them digitize some critical... Time critical operational processes, which which kind of also, you know, have some regulatory approvals and all that. So this will completely help them do things much faster than the fragmented manual process that they have today.

4:44 The next one is a leading global industrial services enterprise. So they have... They are building a mission critical field operations platform. In fact, they've they've got... Recently got funded as huge round of funding. So we are helping them with the engineering on that platform towards performance optimization, modernization, and user experience improvements. The next one is basically a global leader in pest management services. So here, we are building a cloud native kind of intelligent field service customer engagement kind of a platform for them. And, you know, we will have AI assisted scheduling, technician route optimization, integrations with the back end ERP, and other middlewares on the GCP cloud platform.

5:36 So this kind of helps us bring in our expertise in cloud modernization and enterprise integration and intelligent field operations. So these were some highlights of some of the wins we had this quarter. I'll switch to the operational highlights at this point. The first big one is that sometime back, we would have spoken about having won a contract to deploy our Optima digital oil fields platform for India. So that project has been successfully completed in less than six months. This is done in the Northeast in in very difficult terrain across 46 sites of planes as they call them, covering about 80 odd wells.

6:22 So this is... You know, we have deployed everything from the sensors all the way to the Optima platform. And, you know, this will help them basically enhance their operational visibility and production intelligence. So this really strengthens our leadership in industrial IoT systems, cloud native platforms, and, of course, AI enabled energy solutions. The second one, some of you kind of track us, you would have heard about our PR on full... Finished dot ai. Finished dot ai is is a, call it, a product or accelerator that we have launched, which helps modernize enterprise legacy system. It almost, you know, does it 85... 80% faster at half the cost. So we had won an enterprise modernization project, and we have leveraged...

7:14 We have built our own framework for doing this. So this really helps to modernize any older monolithic applications to scalable cloud native microservices based intelligence. And, of course, it it it uses all the latest technologies that are out there and all the all the stuff that you hear from OpenAI, from Copilot, from Cloud. So this really is about 4,000,000 lines of code, and it is actually a specialized DRP that we are modernizing. Of course, multiple modules covering 4,000,000 lines of code being done to a very aggressive timelines. So what this achieves for even the customer is that you can do it at about maybe one third of half of the cost and it's a much faster timeline, which otherwise manually would would would really be either not possible or would take, you know, much, much longer time.

8:15 We also announced the launch of our strategy dot AI platform. This is an AI context engine for enterprise intelligence. So this basically helps an enterprise, you know, to get the context and basically transforms their unstructured data into contextual AI, AI ready intelligence. So the first thing, you know, before you can do any AI, you really need to have your data in order. So so strategy dot AI is that framework. So it covers a lot of other technical things like metadata enrichment, intelligent data orchestration, generative AI, and, of course, it has... You know, it can it can process millions of data assets in in various formats.

9:02 The next one is that we also have... We have acquired the select tier partnership with Snowflake. So this is our emphasis on the data side. So we we just extended our partnership and moved up to the select tier partner during this quarter. This will really help us. Basically, it it kind of recognizes our continued investment in strengthening this this capability in the Snowflake and the AI powered data platform, cloud modernization, and enterprise analytics space. And it will help us go to market with the Snowflake much better. The other one is around the leading global agriculture company. We have modernized and AI enabled their enterprise platform for employees, retailers, channel partners, where we are leveraging intelligent automation and data driven workflows to support operational efficiency and also personalized stakeholder experiences.

10:07 Another one is for a leading NBFC. We have modernized their loan origination system and the sales portal, help them address certain other customer segments using their cloud ready digital lending platform with intelligent workflows. And, you know, kind of it enables them to launch a loan against property kind of a new offering. And the last one here is an award that we received for the work that we have done. So b... BW Business World People Tech Future Awards 2026. We got the gold award for the best HR tech implementation. This was in recognition of the successful delivery of our government of Karnataka, h r m s two program.

10:53 It's one of the largest program which covers almost 55 departments, all the departments for the government, the state government, covering almost upward of five lakh employees across all these departments. So this is basically... It highlights our ability to execute large scale mission critical digital transformation projects, which obviously have a lot of complex architecture and integrations to various systems. So that kind of are all the stuff that I wanted to cover on the operational highlights. But thank you,. Thank you,. So,, let's get the questions queue started.

11:39 Sure. Thank you. Questions. Okay. Perfect. Thank you very much. We will now begin with a question and answer session. Anyone who wishes to ask a question may press star and then one on the other stone phone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking your question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Again, to register for a question, you may press star and one now. Participants, you may press star and then 1 to ask a question.

13:01 Your first question comes from the line of Saijitendra, an individual investor. Yeah. Basically, I had a few questions here. It's regarding one of the acquisition that we had made that is Qumari. May I know what's the revenue impact with that acquisition? And the second one is we had an... I think the... In AGM, we had an 50,000,000 FCC proceedings plan. Right? But what was the further process you have been taken for getting that proceeds?

13:47 Okay. Thank you, Jitender. So let me answer the Qumari one first. Qumari, this quarter, we see the acquisition for Qumari was more for capability and not revenue. So we wanted to get into the space of ServiceNow. So when Kellton started on its own in the ServiceNow space, we had some certifications, we had some capability. But when the customers are going and looking about us on ServiceNow portal, they are not seeing much activity, no case studies, nothing. So what we felt was in order to jump start our offerings to our customers, our reach to the customers, our marketing capability, we felt the need to go buy a company that gives us the capability.

14:34 So with the acquisition of ServiceNow I'm sorry, with Pumori, now we have the certifications that are required, the case studies that that, you know, they have have now become KELLTON's case studies. So with that, right, we can go market ourselves to the customer saying that, hey. We have this many certified people, and we have so many case studies that we have done successfully. Now the customers are having confidence with us, people are having confidence with us, and we are getting client wins because of that. Okay? Just to ask a question on the revenue for Qumari, the last this quarter's revenue or the last quarter's revenue was about 4 crores. It's not much. That is the reason why I said we acquired that company more for capability and not for revenue.

15:23 Now answering your question of the FCCB round. Yes, we did the first round. The second round is delayed because of the global headwinds that we are facing. You understand all the global headwinds that are going on. And also, today, IT industry is not or IT companies have not seen a good limelight. So we're just waiting and watching. It is going to happen. It's just a matter of time. But it got delayed because of the whole global headwinds and anything else. You, Deepa. Next question. Sure. Thank you. The next question comes from the line of Krishnans, an individual investor. Please go ahead. Hi, sir. Good evening.

16:09 Good evening. You please throw some light on the account receivable balances as, you know, it it has been increasing year after year, and it is quite unusual for an IT company to... As I... In my limited knowledge, the account receivables don't pile up in the IT space. Sir, just to give you a perspective there, Krishna. Just to give you a perspective, we have many large customers. Right? I don't want to name names. These are Fortune one hundred companies in The US where our, our clock begins after ninety days. That means after we raise the invoice, we collect after ninety days. We have like that in the Fortune We are a small company. We are not like the large companies that have the muscle power to negotiate. For us, it's like take it or leave it.

17:07 Because that has been the case traditionally, and it has been there. So to answer your question on the receivables, on the absolute numbers, on the percentage wise, we are almost the same. We have not grown. But on an absolute numbers because our revenue is growing, right, the numbers are also increasing because of that. So if you look at our DSO days, we are at one hundred plus days is where we are. In addition to that, we also have customers in India, that is the government customers, the LICs of the world, the HRMs of the world, where the lead cycle of getting invoices cleared is long. So those are the reasons why our receivables are high. So that has been the case traditionally, and it's continuing on. And that's not a reflection of our inability.

17:54 It's just that we don't have the muscle power to negotiate better. Contextually asking, the account receivables are being getting converted. They're not being provisioned, but it's taking a long time. That is correct. We don't have. If you can see, right, we have not written off too much. Have written off probably in a few crores, but we're talking about handful of crores over a period of one year or so. But beyond that, we have not. So these are uncollectibles, sometimes disputes, we write off. I don't have the exact number of $20.26, but I'll get the number and answer while they're going on on what we wrote off last year, okay, just to give you an idea of how low the number is.

18:43 Sure. Thank you. Thank you. Next question, please. Before we take the next question, a reminder to all the participants, you may press star and then one to ask a question. Your next question comes from the line of, an individual investor. Please go ahead. Good afternoon, sir. How are you? Fine, sir. Yeah. How can I help? How... What can I answer for you? Sir, what is the next two quarters? What your guidance you are giving, sir? So at this point, right, you are... You know what's going on in the in the headwinds that you're facing. Yes. Yes. Right, you know, we thought that, you know, the war is is going to end, and it has restarted.

19:29 Okay? So lot of customers for us, we have what we call delayed starts. So people are signing on contracts and delaying the start because the companies itself are worried about their cash flow. This is we're talking about in U. S. We also have certain companies where we get to a state often or negotiations done, the contract needs to be executed, they're pushing it. Okay. We'll do it next month kind of stuff because they're worried against cash flow of their own company. So I don't want to give a guidance because at this point, right, whatever guidance I I I might give may not be may have an impact on what is happening to the global environment that we are facing at this point. So we will be doing if you look at from a total year point of view, right, we will be at par or better than what we did last year from the growth perspective.

20:29 Your next question comes from the line of Harsh, an individual investor. Harsh. Hi, sir. What can I go ahead, please? My question is regarding the revenue growth has been relatively moderate over the quarter. So what gives you confidence in accelerating growth during financial year 2021? Okay. So it's twofold, like I was talking to Vishnad, right? We have pipeline is there. It's just a matter of getting them executed and started, right, where I said the delayed start that were happening. So there is demand out there. It's just people are not people, I mean, customers are not getting us to let us start or not signing on the contract so we can start. So that's one thing that is good news for us.

21:25 Second thing is AI led, right? A lot of AI led inquiries are coming in. Yes, some of them are smaller, AI, related projects, you know, pure AI related projects are small. But whatever we are doing from a transformation per... Perspective, yeah, there is a component of AI in every project that we're doing now. Unlike before, now every project has some AI twist to it. There are demanding certain things that we have to do in the AI. So that gives me confidence that, you know, the... Once all the chaos that is happening around the world settles down a bit, we would be in a much better shape. We would be doing that is the reason why I confidently said to Vishnab that we would like meet and not beat what we did last year.

22:11 So that is my answer to this, okay? Next question, please. Thank you. The next question comes from the line of Shruti with Softail. Please go ahead. Hello? Yes, please go ahead. Yes. Good evening, sir. Good evening. I just wanted to understand that currently, many IT companies have announced AI platforms. What differentiates the SKELLTON's AI strategy? And how will it generate sustainable revenues? Okay. Yes. I think Kanjit has talked about a little bit about that phoenix.ai and struct.ai. We also have our own internal CHI platform. CHI platform, what it does is it improves the efficiencies of delivery.

23:03 Examples, we have seen 30% efficiencies coming in, in certain areas, not all of them, but in certain examples like testing related ones, the business development side, also the BA side of it, analysis side of it, all of that is getting 30% of the efficiencies we're getting using our platform, internal platform. Now coming to the external customers, right? We see that the phoenix dot ai for the world, even the Kai of the world as well as the Soft AI, we will see more and more wins. Currently, they explained one customer, right? It's 4,000,000 lines of code. We have now launched a campaign that would help acquire more customers that would potentially need the similar kind of services because there are many companies out there that they have legacy code and they have legacy platforms that they're shying away from doing it for two reasons. One is the cost factor. The second is they're worried what happens to their operations. Right? We have good... We we have successfully deployed our phoenix.ai.

24:08 And like Karanjit said, right, it's gonna be a 50% savings on what some of the customers or our competitors are charging. So that will give us more revenue from that side. Thank you, Shubham. Next question please. Thank you. Your next question comes from Shubham, an individual investor. Please go ahead. Yes. Good evening, Shubham. Good evening. Can I answer what yes, you are? Please go ahead. Sir, my question is in like continuous to the question that has already been asked and you have answered with respect to the guidance. So if you cannot provide the guidance with respect to the next one year, can you throw some guidance for the next two to three years or for longer run?

24:57 See, this... The reason why we're doing shying from that is, like I said, we will meet and or beat what we achieved last year, what we did up to to the... I'm talking financial year '26. Right? What is going to be the next two years' projections at this point, right? There's no nobody can give that guidance at this point because of the changes that are happening around the world. I'm not talking about just geographically, geopolitically. I'm talking about even the AI impact that is out there. At this point, right, if somebody gives you a guidance saying that in a three years, this is the number, I know that's going to be tough ask at this point. People are all the big companies are also giving one year guidance. That's why I said, I will meet and or beat what I did more what I did achieve the revenue growth that we achieved last year.

26:12 Participants, you may press star and then one to ask a question. Our next question comes from the line of Neha, an individual investor. Please go ahead. Good evening, everyone. This is Neha, an individual investor. Yeah. Please go ahead with the question. Yeah. First of all, I want to congratulate you on the strategic joint venture with Action Energy. This appears to be an important step in strengthening KELLTON's presence in the GCC region.

27:00 And in this regard, my question is beyond the immediate revenue opportunity, and how does this JV fit into KELLTON's long term strategy and regarding this differentiated IP led businesses? And where do you see this partnership and its contribution to KELLTON over the next three to five years range? Thank you, Neha. Let me I guess, there was a press release that we gave the press release we gave on the JV side of it. The CEO of Action Energy has already stated that our target is to achieve 5% of $1,000,000,000 market, right, that is out there in this space, especially that transformation of the oilfield and the digital oilfield platform.

27:49 So that is the number that is what we believe we can achieve in the next three years. Now to answer your question on the strategic reason why we did it with Action Energy and why GCC, we have been tactical when it comes to entering the g... GCC market. Specifically, right, we have more on the UAE side than really anything else. So the... What we did is, you know, Select, I think, you know, Karanjit also mentioned a few customer wins that we have achieved. There are a few long term customers that we had. But from a strategy point of view, that GCC market is unknown to us. So we felt that a partnership with a company like Action Energy, who has the local knowledge, the local relationships, local delivery capabilities would help grow that market. So beyond the digital oilfield that 5% we talked of, dollars 1,000,000,000 we talked about, we are also working with Action Energy in providing transformation solutions and the AI led transformation solutions to other companies there and not just targeting only the oilfield side of it. So we believe that, right, the next three years is going to be important for us in exploiting this and penetrating the GCC now beyond UAE that we currently have. And with Action Energy, the Kuwait is where we are starting the journey and later on, we'll expand to other GCC countries. So from a long term perspective, we see a lot of prospects in the GCC space.

29:16 And we so the answer to the question is, immediately, we see that the 5% of the $1,000,000,000 is what we see. But beyond that, there's a big scope. At this point, I don't have a pipeline built. So once the pipeline is built, I would be able to answer the question better. Thank you, Neha. Next question, please. Thank you. Your next question comes from the line of Krishnan, an individual investor. Please go ahead. Hi, Krishnan. Hi. Hi, sir. Krishna again. As you have previously mentioned, the uncertainty with regards to the guidance and the future performance, can we level of revenue.

30:02 Yes. Sorry to talk, Krishna. Sir, we had lost your audio in between. May I request you to repeat your question once again? Sir, we are not able to hear you. Am I audible now? Yes, sir. Yeah. Hi, sir. As we previously mentioned, the uncertainty with regards to the guidance and revenue performance, the future performance, can we expect a volatility in revenue as well or we would be maintaining the current levels of revenue that is about INR $3.50 crores of revenue per quarter? See, we have a pipeline of close to nine months, right? Pipeline is in, I'm sorry, order book of nine months, if I get it. So order book of nine months. So there is a predictable revenue for the next nine months.

30:53 It is the growth that the expectation that people are talking about is where I'm unable to give the guidance. Okay? Would it be like 10%, 15%, 20%? Those are the guidance that I cannot give at this point other than to tell you that, yes, we will meet and beat what we grew last year, similar percentage why we would grow for sure, given the pipeline that we're seeing and the backlog that we have. Hope I answered your question there, Krishna? Thank you. Okay. Thank you. Thank you. Just give it a couple of minutes. If you don't have any more, Sadia, let's wrap it up. We have a question from the line of Abhishek, an individual investor. Please go ahead. Hi, Abhishek.

31:51 Hi, sir. Good evening. Sir, my question is there to. Yeah. Go ahead. Audible? Am I audible? Yes. You are. Please go ahead. Yes. Sir, my question is that what are the new innovation in pipeline for the next three to five year revenue targets of the company? See, AI is going to be now embedded into pretty much anything and everything that, you know, that we're seeing out there. So AI led growth is going to be there. So one of the things that we are good at at this point, right, is taking AI to the core. Most of the companies that are seeing are just slapping on AI as an add on. For us, AI is not that we take it to the core, okay? That is one. We're also looking at enterprise modernization that is happening.

32:43 Earlier it used to be digital transformation of the enterprises. What we are seeing now is beyond that, right now we're seeing AI led modernization is happening. We also see a lot of partnership led growth, which is why we invested heavily into ServiceNow, Microsoft, Snowflakes. We are seeing that growth that is going to be there. So those are the ones, right? And existing customers, we're reaching out, the previous customers that we have serviced, we're reaching out with new capabilities that we have done, new solution offerings that we have, the product offerings, the platform offerings that we have that we did not have, that is going to ease a lot. At the same time, right, AI is change... Is changing how we do, do business, and it's like every quarter, right, there is a change. So we have to transform ourselves and be current.

33:33 So those are the challenges that are there, but also that gives an opportunity when you have those kinds of challenges. And we have always been ahead of the curve. And we have what we call the tip of the spear kind of a strategy where we are at the cutting edge kind of solution offerings. So we believe that we are in a very good place when it comes to the next wave of whatever would be the disruptions that are coming in or the technical capabilities and or technical challenges that are coming out there. So we would be ahead of that, and we believe that we will be succeeding much more given the posture that we have, given the capability that we have. So I'm going to stop there. Thank you, Abhishek. Thank you.

34:21 Participants, to ask a question, you may press star and 1. As there are no further questions from the participants, I now hand the conference call over to Mr. Niranjan Chintam, sir, for closing comments. Thank you, everyone, for joining our earnings call. Looking forward to talking to you. If your travels take you to Hyderabad and or Gurgaon, please do look us up. Please reach out to the investor email address, and we'll be happy to sit down, talk to you, give more information, show and tell our solutions that we're building to our customers. So looking forward to talking to you soon. Thank you. Bye bye.

35:11 Thank you. On behalf of KELLTONTEC Solutions Limited, that concludes this conference. Thank you, everyone, for joining us, and you may now disconnect your lines. Thank you.