Kellton Tech Solutions Limited (NSE: KELLTONTEC) Q3 2025 Earnings Call dated Feb. 14, 2025
Corporate Participants:
Niranjan Chintam — Chairman
Karanjit Singh — Chief Executive Officer
Unidentified Speaker
Srinivas Potluri — Chief Executive Officer
Analysts:
Unidentified Participant
Motilal Oswal — Analyst
Gaurav Shah — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Kelton Tech Solutions Limited’s Q3 and Nine Months FY ’25 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation Concludes. Should you need assistance during the conference call, please signal an operator by pressing start and zero on a touchstone phone. I would like to thank all of the participating in the company’s earnings call for the 3rd-quarter of the financial year 2025. Before we begin, I would like to mention a short cautionary statement. Some of the statements made in today’s con-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. 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 Mr Niranjan Chandam, Chairman and Whole-Time Director; Mr Karanjit Singh, Chief Executive Officer, India; and Mr Srinivas, Chief Executive Officer, US. Thank you. And over to you, Mr, Niranjan Chintam sir.
Niranjan Chintam — Chairman
Thank you. Good evening. Good morning, wherever you are. Thank you for joining our Q3 earnings call. I apologize in advance. I have a slight throat issue, maybe clearing my throat or coughing. So please bear with me. We’ll start-off with the financial numbers and then we’ll take the operational highlights. The revenue numbers were around INR279 crores for this quarter, which is a close to about 13.7% year-on-year increase and 3% quarter-on-quarter. I wanted to again reiterate that this 3rd-quarter typically is not a great quarter because of the US holidays and the number of billable hours that are available there. Hence, it’s always been a slightly lower-growth that we normally have and which is in-line with what this quarter also shown. The EBITDA was around INR34.4 million — sorry, INR34.4 crores and the net profit is close to INR21 crores. The EBITDA margin is around 12.3% with a PAT margin of 7.5%. The EPS that we have announced is 2.2% for this quarter. Now comparing that with the nine months, the nine months number is around INR812 crores with the INR99.5 crores as EBITDA and a net profit of INR60.5 million.
Again, the EBITDA margin is around 12.2% with a PAT margin of 7.4% for the nine months and an EPS of 6.3 for the nine months up-to-date. Now I want to hand it off to to talk about operational highlights and customer wins that we had this quarter. Ranjit?
Karanjit Singh — Chief Executive Officer
Thank you. Thank you, Viranjan and hello, everyone. So let me we’ve had — let me speak about the client wins first and then I will talk about the operational highlights. So this quarter, we’ve had three significant client wins. So just to give a little bit of a color on those three. So there is one where we are basically working, we’re working with a client to revolutionize and build an advanced intelligence platform that enables them to seamlessly track funding and geospecial insights and marry that with their operational workflows. So this really is you know, a cutting-edge digital transformation project which will you know which is targeted to deliver efficiency and precision in the sustainable landscape management space that we are in we’ve also been working with another large customer to redefine the digital ecosystem and we are helping them to build a cutting-edge Finops driven approach that will help them elevate automation scalability and operational intelligence and the third one that we are working is a large power group where we are basically engineering an advanced AI-powered solution that helps them revolutionize their whole end-to-end coal tracking from the mines all the way to the actual power station.
Today it’s a very manual system. So this will help them eliminate all these manual inefficiencies and will really lead to a real business efficiencies for them and also give them real-time precise data. And of course, this solution will integrate — it’s automated and it will integrate with their enterprise systems and the logistics systems and help them enhance their quality-control and build-on their operational efficiencies. So those are the clients that we acquired. Turning to the operational highlights. So the first one in this quarter that was significant was the successful implementation of SAP S4HANA system, which is helping them drives a seamless business integration and operational efficiency across 21 countries. So this is done for a global leader that provides high-performance computing and AI infrastructure. So this is a rollout across their 21 countries. The other one that is significant on the digital side, we have helped a customer launch their OTT content management system for their global this is a global platform that serves about 33 million users worldwide and so they just went live with it and in fact this has been recognized by MongoDB as a standout use-case for revolutionising efficiency and scalability so that’s another one.
The 3rd one is about we were actually Forbes actually spotlighted Kelton for the work that it is doing with the United Nations body and we have recognized our role in streamlining financial aid being delivered through advanced digital solutions. So yeah those are some of the things that were significant that I thought I should mention.?
Niranjan Chintam — Chairman
Okay. Thank you, Karanjit. Let’s open up the queue for questions. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use answers while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. You may press TR and 1 to ask a question now. Anyone who wishes to ask a question may please press and one ladies and gentlemen, you may press star and one to ask a question Ladies and gentlemen, to ask a question please press star and one now. The first question is from the line of Ilesh Gopani from Gopani Securities Investment. Please go-ahead.
Unidentified Participant
Good evening, everybody. Thank you for giving an opportunity for asking the question. Can you please give the outlook for the next two, three years and what are the growth prospects for the company and what can be the normal EBITDA margin in this — of the revenues that we see? And what is the net-debt position at present?
Karanjit Singh
Sure. So let me just answer the question on the margins part of it first. See, our goal is to get to the 17% within the next two years. That’s the target that we are setting ourselves internally to achieve a 17% EBITDA margin that we want to achieve. I think today we are around 12.5%, that’s an aggressive goal that we put ourselves. We are able to do a lot of efficiencies within the system that we are able to leverage. Now also AI is giving us a little bit of — not a little bit, it’s giving us a productivity increase that we’re able to leverage using the software. So to answer your question on the top-line, see, our target has been doing near-term, short-term and long-term, right? I’ll just talk about the near-term, short-term only at this point. Our target is the $200 million that we want to achieve in the next two years is the target that we have set offer. And I think the path that we’re taking, we should be able to achieve that. Talking about the debt, I’ll get back get that number will pull it up and get the number back to you. But again, there’ll be some slight fluctuations Where the working capital will go up, whereas the long-term debt is going to be lower. So based on where we are within the cycle of our usage of funds, right? It varies from month-to month based on the working capital, but I’ll get back to you with answer once I get that feedback from my financing.
Unidentified Participant
One more question, please. Where we are — what we are going to raise the QIP or some raising of funds at what is the position in this regard? We are — the two funds — two fundraise activities going on now. One is the promoters and management is taking an round via preferential route, that is one that is going on. The second one is the FCCB route. So we’re doing a 10 million that let’s say, the promoters and the management is taking. At the same time, 10 million FCCB round is going on. Today, we are in the fag end-of-the process. It’s a long run-out process, not just limiting to what approvals we need from the, the NSE, BSE. It is also right, the banking requirement because there is a foreign currency involved. So all that route because it’s coming from outside the country, there are agencies and agents that we need to find. So all that process, we are pretty much very close to the fag end of it.
I’m thinking like one-week, maybe max two weeks is when we would be able to close that FCCB round and similar timelines for the preferential too because there are a lot of questions back and back-and-forth from the NFC, we are answering those back. So we — the idea is before March-end, right, all the monies will come in, but we have set our target to and I’m talking about the whole process. We are hoping that it’s going to be sooner within this February itself. But I’m giving an outside chance in case of procedural delays. The investors are ready to invest the money. It’s just a matter of getting this procedural part taken care of so that the money is sitting in our bank.
Unidentified Speaker
Thank you. Thank you,. Thank you for your questions.
Operator
Thank you. Next question, please. Thank you. Thank you. Participants who wishes to ask a question may press star and one. The next question is from the line of from Motilal Oswal Financial Services. Please go-ahead.
Motilal Oswal
Yeah. My voice is audible.
Karanjit Singh
Yes, you are good.
Motilal Oswal
Thank you. Good evening, sir. I have couple of questions, sir. Please go-ahead. About financial performance as revenue growth, sir. What are the key drivers behind the company’s revenue growth Q3 financial ’25? Okay. So, can you mute yourself because a lot of background noise coming in. Thank you.
Karanjit Singh
I’m going to, sir. I’m going to yeah. Okay. So to answer to your question is another growth areas, right? We are targeting growth in the AI and AI-enabled services. That is one area of target that we’re going after and we’re seeing a lot of traction in that. And also the second thing that we have been doing is we’re doing a lot of account mining. So I have given a target to our senior management team that we need to start getting more revenue from existing customers. It’s not the number of customers, it is the amount of revenue we’re able to get or increase the revenue that we’re getting from the existing customers. So those are the two key growth areas that we have when it comes to the customers. And also we have some partnerships that we are building and working with that is in the — some of it is in very — we are deeply involved already. Some of it we are making forays into it.
There again lot of procedural stuff that happens, these kinds of large partnerships that we tie-up with. Hence, they might take a little bit longer to see some revenues, but we are in there actively engage with the partnership teams of these large entities and we should be able to start seeing traction going-forward.
Motilal Oswal
Thank you,, for your question. Next question, please. Can you — yeah, margin expansion about. Can you please elaborate on the factors contributing to the company margins expansion in Q3 and financial ’25 and what initiatives are being taken to sustain this growth? And that’s another question, sir, growth strategy. So what are the strategy, where it is for the next quarter and how do you plan to achieve that?
Karanjit Singh
Okay., there is too much of an voice is cracking it. Excuse me. So can you mute yourself again please and I’ll answer your question just that it’s a little bit not clear, but I’ll answer that, okay. So the margin improvement is primarily driven by efficiencies that we’re able to squeeze-out of the people — the system itself, right, we found some inefficiencies and this that out now. The second thing that I told you earlier also is that we are able to get more performance improvement using some of these AI tools that we are actually using in our day-to-day operations. Those are the two reasons why we are getting a lot of traction and also improvement in March.
Motilal Oswal
Okay. Thank you for your question.
Operator
Next question, please. Thank you. The next question is from the line of Gaurav Shah from Harshad Gandhi Securities. Please go-ahead.
Gaurav Shah
Yeah, hi. Thanks for the opportunity. Sir, my question is on the US market. Can you please provide some color on the traction you’re seeing in the US after the Trump government coming in? And are you seeing — are you getting any more inquiries from the US clients? That’s all.
Karanjit Singh
Thanks. Okay. I’ll give a little bit of color on that and I’ll let our CEO from US answer the question. So there is a lot of noise around this Trump and what is impact to us. And we don’t believe there is going to be any impact from our case when it comes to the IT sector so that from our strategy we don’t have to change anything. Talking about what is it that Trump is doing that is going to add or reduce, I’ll let Srini answer the question. Srini, can you take this?
Srinivas Potluri
Sure. Thank you, Niranjan. Yes. So basically, like Niranjan said, whatever Trump is doing in the first three weeks or so in the office has mostly been tariffs and so on, which have an impact on actual manufacturing, et-cetera and pricing. But from a services side, there is no impact. So-far, there is no focus on services except the outlook is that there will be deregulation, specifically on the AI side and the cloud side and so on and so forth, which will — which will improve the IT services business in the US. Have any of our customers made any changes? As of now, there are no changes. They are continuing as they are. It’s too early to say that there is speculation with respect to what might happen, but from a perspective of our customers changing course or doing anything different, we don’t see that happening.
On the government side, obviously, in the US, there is going to be deregulation and open competition is going to be projected. So we might see — we might see a lot more potential or possibilities on working with the government sector in the open competition space. Thank you. Thank you, Niran. Anything else?
Gaurav Shah
Thank you okay. I got you, sir. Sir, my second question was with respect to our contract with LIC. So what’s the traction on that sir? Are we getting from the government? See the government is always going to be direct payments, right? It’s a milestone payments.
Karanjit Singh
Okay. We did get some payment in a way once we met the milestone. I think the next milestone is probably within the next three months, we should get a large chunk of the money coming in. So it’s an ongoing process, right? So we are also this is a little bit slightly skewed, right? Initially, the amount of money we get is low and as we get on with my multiple year contract, it’s a seven-year contract. As you get to the yearly payments will increase. Our outflow initially when it comes to our investment is higher from a cash-flow perspective, but we recoup that probably within three years.
Gaurav Shah
Okay. So what’s the current auctioning as of now? Outstanding for what? LIC? There’s no outstanding. So it’s — so we have not the milestone.
Karanjit Singh
There’s nothing outstand.
Gaurav Shah
Okay. Okay. So whatever we have built-in now, we have got the payment, right? Yes. Whatever milestone we met, yes, we have got the payments. Okay. In the next milestone is going to be next — in the next three or four months.
Karanjit Singh
That’s correct.
Gaurav Shah
Yes. Okay. Okay. Thanks a lot. Thank you. All the best.
Karanjit Singh
Thank you.
Operator
Thank you. The next question is from the line of Amita Gesha from SEC Harva. Please go-ahead.
Unidentified Participant
Yeah, good evening. Am I audible? Yes, you are. Thanks for the opportunity and congratulations first of all, the whole team achieving a milestone of INR1,000 revenue in PTM. Okay. Thank you.
Karanjit Singh
Thank you.
Unidentified Participant
And sir, my question was connected to like how does the company differentiate itself from larger IT service forms.
Karanjit Singh
So I’ll let Karanjit answer that. He’s got a few lines that he loves to use. I’ll answer — let the two operational People answer that, right? See, from a larger company perspective, the nimbleness is not there. Mean we are much more aggressive. We are a little bit more accommodated when it comes to some of these small granular differences in contracts and other that. Okay, sometimes it also happens that the larger IT companies are unable to provide the services and the customers have called us basically and said, hey, I’m not going to name the name, these large companies are unable to provide or were failed in their — in the delivery, can you now recover from it? And we have done that successfully. It’s not just I’m talking about the enterprises, it’s also the government sector also we get cost like. Kanjit, can you add more color to this, please?
Srinivas Potluri
Yeah, sure. Yeah. So kind of as Niranjan said at a high-level, that is what it is. See, you know, even as a company, even the roots of the company, you know, we started-off from a very different routes. We call — like to call ourselves the Bond Digital IT services company because you know the traditional IT was already taken, that’s where we started and we have a very strong heritage in-product engineering and we have worked with leading start-ups or which are today global companies as well as large enterprises. So that’s kind of what sort of differentiates us. As Niranjan said, yes, we are not saying larger companies do not deliver projects, they do.
But there are — there are some things which have to be done at a certain speed done in a more agile way, in a nimble way and that is where our differentiation lies. So we have — we have so many case studies that we get going and talking to customers. It kind of shows. In fact, one of the things that I mentioned today, which is the large OTT, the 33 million user OTT that went live, in fact, we have built a completely cloud-native platform and moved them away from a platform built by one of the big fours and they actually considered one of the big IT companies is already there, but for this work, they have come back to us. So that’s kind of what our differentiation is. And by the way, that’s what would be expected of a smaller company, which will kind of do it faster, we’ll do it agile. Of course, we are not that large. So we do — we are very flexible and we accommodate a lot of, you know, requests that we get from customers which they not — let’s have that flexibility with also larger companies.
Unidentified Participant
That was very helpful. Sir, another question was connected to the employees, like what are the total number of employee count that we have and how does the company plan to retain and attract talent as far as AI and all these things are concerned?
Karanjit Singh
There are two scores of thoughts there, right, to increase the employee base or not increase your employee base using these AI tools, right? Because a lot of efficiencies have come. Wait-and-watch mode on exactly what happens with too many what you call the rumor intelligence going on there, actual case studies out there that talk about the reduce need of these IT employees while you use some of these tools to do so to do some of the work. To answer your question, we are around 1,600 employees globally and that is where we have been constant around that time. And are we looking to hire people? Absolutely, we’re looking to hire people.
And your question related to how do you able to attract and retain. Our one-way is giving them challenging work. You would be surprised that some of the people that we bring on-board from these large IT companies, you know they are used to one or two projects, whereas when they come to our system, they’re doing multiple projects which are but most cutting-edge. Those employees were doing part of the project whereas here they get to do the whole end-to-end kind of a solution and also the aggressiveness that we provide that they have not seen. So all those differentiators there.
And lastly, we also give stock options to work our long-term employees that have been with the company as well as to attract new talent and that we believe is needed for the growth of the company.
Unidentified Participant
Thank you. May I ask one more question, sir.
Karanjit Singh
Please go-ahead. Sir, are there any plans to like enter into new geographies?
Srinivas Potluri
No, at this point, no. I was — I was corrected by the number of employees. It’s actually 1,750, a little over 750. No, we don’t want to enter new geographies. We already have enough geographies that we have. There are some challenges with some of the geographies that we are facing and we have been addressing that. But at this point, no, to answer your questions no. But while we will do projects from other geographies as an inbound or as an outbound, but not open up offices in those countries. So thank you for all the explanations and all the best for the future, sir.
Unidentified Participant
Thank you.
Karanjit Singh
Next question, please.
Operator
Thank you. That was the last question for today. I now hand the conference over to Mr Niranjan Santam for closing comments.
Niranjan Chintam
Okay. Thank you. Thank you everyone for joining our Q3 earnings call. I appreciate you showing the continued faith within us as a team as and as a company. Looking-forward to more interactions with you as we move on — as you are going to take part in our growth — growth trajectory. Thank you, everyone. Have a nice day.
Operator
Thank you. On behalf of Kelton Tech Solution Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.