Kellton Tech Solutions Limited (519602) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to the Kellton Tech Solutions Limited Q1 FY '26 Earnings Conference Call. [Operator Instructions] I would like to thank you all for participating in the company's earnings call for the first quarter of the financial year 2026. Before we begin, I would like to mention a short cautionary statement. Some of the statements made in the today's con call may be forward-looking in nature and such forward-looking statements are subject to risk and uncertainties, which could cause actual result 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. Audience 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 the financial quarter under review. I would now like to introduce you to the management participating with us in today's earnings call. We have with us today Mr. Niranjan Chintam, Chairman and Whole-Time Director; Mr. Karanjit Singh, Chief Executive Officer; and Mr. Srinivas Potluri, Chief Executive Officer from U.S. Thank you and over to you, Mr. Niranjan Chintam sir. Thank you and over to you.

Thank you, Palak. Good morning, good evening, wherever you are. Want to start off with the financial numbers and then we'll talk about operational highlights. So on a consolidated financial, we were happy to post INR 296 crores as a top line for Q1 FY '26 with an EBITDA of INR 35 crores and a PAT of INR 22 crores. The EBITDA percentage is 12.1% and the EPS stands at INR 2.32. The revenue growth shows about 12.8% on a year-on-year growth and a 3% growth on a quarter-on-quarter. And EBITDA growth is 10.2% on a year-on-year growth with a PAT of 13.5% year-on-year growth. Now on a stand-alone basis, we showed a top line of INR 53 crores, which is about 15.7% increase over the last quarter. Just want to caution here, this quarter reflected hardware sale. We -- I think we announced this Oil India contract that we have won. There was a big hardware component to this quarter. Hence, you see an increase of this size, whereas the profitability has not increased. The reason for that is typically in a hardware, the margins are lower compared to services. The EPS on a stand-alone basis, we came up with is INR 0.28. With that, I want to hand over to Karanjit to talk about the operational and customer wins. Karanjit, over to you.

Good evening, everyone and thank you, Niranjan. So let me first give you a little bit of details on the client wins. So we had 3 significant client wins in this quarter. I'll speak a little bit about them. The first one is, basically we partnered with a global beverages leader to implement a configuration compliance solution that will provide continuous monitoring and streamlined automation that will ensure regulatory adherence and operational control. So this was basically targeted towards improving their governance, the clients' governance and audit readiness and reducing the compliance risks. The second one is also something similar but this is with a leading U.S. health care -- health insurer to integrate their security center and deliver automated and scalable workflows that will again help with regulatory compliance and risk management. So this solution kind of enables real-time vulnerability detection, accelerates the incident response and strengthens the overall cybersecurity defenses. So these are 2 in that area. The third one is, we've partnered with a premier Indian travel technology provider and we are helping them with basically the back-end engineering and this is pretty complex and high-end engineering. And this will also be back-end engineering on the Agentic AI and AI-driven automation and workflows as well as sort of streamlining their integration with [indiscernible] and a couple of other integrations that they have. So these were the 3 significant wins for this quarter. Next, I'll just touch upon a little bit on the operational highlights. So the first one over there that I'd like to sort of mention is that we basically seamlessly migrated a mission-critical application for one of the world's largest agriculture and food production enterprises. So we moved them over, cut them over to a modern enterprise platform. And the key highlight here is that we did this while achieving 0 downtime. So of course, we worked very closely with the client's global teams. So this kind of really helps -- showcases our expertise in executing complex high-risk migrations and uninterrupted operations through all of it all. The second one that I just wanted to mention was we were amongst the select group of organizations that were invited to a NATO-led conference in Finland, where we have a key project that we run for them. So where we presented this key project outcomes and also addressed the complex client challenges that we addressed under tight time lines. And this earned a lot of praise from the NATO representative for the clarity with which we did it and the professionalism. We have had a long-standing relationship with them. And of course, there is a road map we have -- we're working on the future road map as well. The third one is where we actually partnered with a Big 4 firm. So this firm for its ultimate client was working on advanced agentic workflows and decision logic. And at the back end, it is Kellton that sort of helped with developing and enhancing enhancements to a climate AI control tool. And the last one is something that Kellton has done on its own, which is about launching KAI. KAI is our enterprise-grade Agentic AI platform. This platform is something that we have built and it helps with autonomously managing workflows, approvals, actions across finance or operations or HR and support. So very typical of any Agentic AI kind of a platform. And this -- the good thing is that this platform can seamlessly integrate with enterprise systems and delivers intelligent and context-aware automation at scale that helps with accelerating client decisions, workflows and, of course, boosting their efficiency. So yes, these were the things around the clients and operational highlights. Back to you, Niranjan.

Okay. Thank you, Karanjit. Palak, can you open up for questions, please?

[Operator Instructions] The first question is from the line of [ Gaurav Shah from Harshad Gandhi Securities ].

Sir, can you provide some color on the current business environment in the U.S. because of Trump and tariff issue and all that?

Sure, Gaurav. I'll give a very high level and then ask Srinivas Potluri, who is based out of U.S. to give you more color to that. So Gaurav, I think currently, right, the tariffs that is happening is more on the goods side and not the services side. There is no impact directly to us, right? There is always going to be an indirect impact. The indirect impact is that every customer is being careful in how they spend the dollars. But what is helping us, Gaurav is, unlike before, right, for the digital transformation, typically, the digital transformation initiatives were either done by the IT people or some, let's say, the digital officers kind of initiatives, whereas the AI part is now driven from the C-suite, okay? So that's the reason why we are seeing a lot of traction where the CEOs or the CXOs are asking questions what is our AI strategy? What are [Technical Difficulty] how can we save money in, or retain customers, how can I increase my profitability, all those things that the CEOs are initiating. So we are in a good place where we are engaging directly with the C-suite. So that is helping us with our revenue that we are seeing, and we are hoping that this is going to continue on. With that, I want to ask Srini -- Srinivas Potluri, who is based out of the U.S. to give you a little bit more color than what I just stated. Srini, can you take that, please?

Thank you, Niranjan. So good morning, good evening, everyone. Like Niranjan mentioned, right, there is no direct impact of tariffs on the sales side. But due to some of the uncertainty as well as there is some amount of collateral uncertainty that has risen due to this tariff situation and companies are holding back on their spend, waiting to see how this pans out. But like Niranjan said, right, it's a two-way street because of AI and because of some of the layoffs that have been happening here in the U.S. due to the uncertainty, AI has taken a forefront role in trying to understand how to build efficiency. So we are engaging on the AI side with the C-suite and trying to build business on the AI side of the enterprise and how it can be utilized for building efficiencies and growth in this uncertain environment, right? So that's the key takeaway. Yes, there is a -- there are pros and cons to this tariff. But I think looking at it from a perspective of revenue growth and business, I think a lot of this has got to do with initiatives that are being driven on the AI [indiscernible].

The next question is from the line of [ Prateek Bhediya], an individual investor.

Yes. So I wanted to check how are you classifying the AI revenue in terms of the segment. So I see the revenue mix, revenue segment in terms of consulting, enterprise and digital transformation. That is one. And two, in terms of how are you looking at the incremental margins with implementation of Agentic AI? And based on that, if I have any follow-ups, I will check.