Kellton Tech Solutions Limited ($519602)

Ladies and gentlemen, good day, and welcome to Kellton Tech Solutions Limited's Q4 FY '26 Earnings Conference Call. [Operator Instructions] I would like to thank you all for participating in the company's earnings call for the fourth quarter of the financial year 2026. 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 beliefs as well as assumptions made some information currently available to 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 call is purely to educate and bring awareness of the company's fundamental business and a financial quarter under review. Now I would like to introduce you to the management participating with us during today's earnings conference call. We have with us Mr. Niranjan Chintam, Chairman and Whole-Time Director; Mr. Karanjit Singh, Chief Executive Officer, India; and Mr. Srinivas Potluri, Chief Executive Officer, U.S. Thank you, and over to you, Mr. Niranjan Chintam sir.

Thank you, Steve. Good evening, everyone. Good morning. Thank you for joining our Q4 earnings call. It is also a year-end earnings call. So we'll talk about both the numbers. I'll start off with the numbers first and then hand it over to Karanjit to talk about operational highlights and client wins. So starting with Q4. The Q4, we've achieved [ INR 319 crores ] or close to INR 320 crores with EBITDA margin of 9.8% and an EBITDA of INR 30.7 crores and the PAT of INR 19.5 crores. I want to caution everyone that this quarter is typically what we call a balancing quarter, where we're adjust for any shortcomings, either increase or decrease in provisioning or allotments that we have done the prior quarters because this is an audited financial statement. So the numbers may not be in line with what we published last quarter or comparable rather, not in line, comparable, and there will be some regrouping that happened this quarter based on what the auditor suggest and how we move the numbers around and to make sure that it's fully audited financial statements that we are publishing. Okay. The EPS for this quarter is INR 0.34. Also, there is a base effect for this INR 0.34 because of the CCP that got fully converted. From earlier to now, there's an increase in the number of shares. Hence, the price that is showing is across the new shares, too. Now coming to the full financial year. We have achieved INR 1,225 crores, which is about 11.4% year-on-year. EBITDA of again 1.8% for the whole year. And the EBITDA number is INR 143 crores or INR 144 crores close to and INR 91 crores is the PAT for double of the year. The EPS is INR 1.79. Again, the reflection that I talked about is an increase in base of the number of shares because of the SCD, which got fully converted into equity. Now coming to the operational highlights, I'll hand it over to Karanjit to talk about the operational highlights as well as the client wins that we had this quarter. Karanjit, over to you.

Thank you. Good evening, everyone. Let me first go over the client wins, and then I will get to the operational highlights. So we had about 6 client wins. And I will give a little bit of detail on each one of these quickly for you to get us a little bit of details. So we've just signed on with a leading travel technology platform to help them with their cloud-native travel integration. This will help them basically enable seamless connectivity with multiple airlines and booking partners. And the objective is to basically enhance the real-time fare intelligence as well as omni-channel booking experience and scalability. The second one, we are working -- we just signed on with for modernizing the internal financial application for a global financial transaction and payment enterprise, which will cover workflow automation, scalable platform enhancements and intelligent process optimization. This will basically help them apart from operational efficiency and accelerating future delivery, but to also make them ready for the AI enabled financial operations and analytics. The third one is a major private sector bank, where we are helping -- working with them on an AI-powered video KYC solution. This basically helps them in automated identity verification to enable faster customer onboarding and intelligent compliance workflows and scalable digital trust capabilities. And the other ones are around ServiceNow. So we are working with a global engineering and consulting enterprise to help them modernize financial operations through the implementation of ServiceNow accounting center capabilities. So this will help them automate our financial workflows and improve operational visibility and also create a foundation for the AI-driven analytics and intelligent financial The next one is a major cyber technology company. We're going to work -- we are working with them to enhance the IT governance and infrastructure visibility, again, through optimizing of their ServiceNow -- sorry, optimization of the ServiceNow CMV capabilities. The last one, we are working with a major global technology enterprise, where we're helping them modernize their enterprise workflow around service now led IT orchestration, around their engineering initiatives and also something around intelligent system. Again, this also involves basically workflow automation and AI-ready support operations that will help them with improving governance and infrastructure reliability. So these are some of the wins that we've had during the past quarter. I will quickly move to the operational highlights. So the first one is around Kellton's on a platform. So our Kay platform, we have spoken about it in the past. So it received the Aba innovation star rating certification at the Aegis Granel awards. These are done are backed by and they recognized our capabilities in intelligent automation, autonomous system and scalable AI deployments. The next one is again around building a major travel platform. So Kellton is about to launch the AI-first B2B travel platform for journey. And this is again a press release that we announced. So if you have seen it. So this platform is an AI first from the ground up B2B travel platform, which will help supplier connectivity, booking workflows and pricing intelligence that build to modernize the whole global travel distribution system. We've also just launched the AI-enabled digital education platform for a major financial services company that will help them complete the loan life cycle of application all the way to approval to disbursement. So this is an unified digital ecosystem. And this will integrate with obviously various customer portals and give a seamless experience to their existing customers as well as user experience and operational efficiency. The last one is around the credit rating, so Niranjan if you want to speak about that one.

Thank you, Karanjit. Yes. So we have been upgraded to A- for our credit rating, and that just reflects our financial stability and also reiterate that we are good for the long-term launches that we have done as well as the cash that we have in the bank and all related activities. With that, I want to open up for questions. Steve, can you start the queue?

[Operator Instructions] The first question comes from the line of Priyanka with Softtel.

This side Priyanka here. I just wanted to -- yes, I want to ask that how has performed post acquisition. And like are you seeing the expected synergies and business growth?

Sure. Thank you, Priyanka. So yes, to answer your question, yes, we are seeing the growth in [indiscernible] has given us the capability to a partnership with ServiceNow. So one of the strategies that we came up with 1 year ago was to target partnership level our growth is what that we wanted to target as the next growth phase of our [indiscernible]. The 3 partnerships that we have targeted as well as Microsoft which is also yielding some revenue coming in last year that has you booked some revenue. And this year, we would be increasing that revenue that we have booked last year. The other one is ServiceNow, which is what the way we have acquired Komori is helping us grow. It was a small revenue base when it comes to in India for ServiceNow. But using that partnership that Komori has brought to us, now we are targeting the U.S. geography. It's been only one quarter. I think this year is when you'd start seeing real fruits of that partnership and the acquisition that we have made for our ServiceNow. The last one is we have also looked at Snowflake, one of the targets that we have taken. And Snowflake with associated with that, we have hired a person to help us, I think. We announced that earlier, is helping us grow that data and AI space is something that we're going to start seeing that also this year. So these are the 3 partnerships like growth that we have targeted last year, and we have implemented it now, and we should be seeing the revenues coming in for these 3 partnerships this year and going forward. Thanks for the question, Priyanka.

The next question comes from the line of Rahul, an Individual Investor.

So what is the target of the financial year-end of term share?

Are you talking about revenue? Revenue, we are looking at 10-plus percent growth for this year is what we are looking at. If everything goes our way, it could be more than 10%. Thank you, Rahul.

[Operator Instructions] The next question comes from the line of Vamshi with Genpact.

So how the U.S. business trending? Should you expect any acquisition that we got initiatives in the midterm?

Thanks for the question, Srini -- Vamshi. Srini, can you take that U.S. business, how it's trending? And I'll answer that question related to acquisition.

Sure. Yes. So the U.S. business is growing -- is showing a kind of a steady growth, not as much as we expected due to the war situation as well as AI. Though the growth might be constant, I think we are seeing some issues with our accounts receivables where they've slowed down a little bit. That is basically customers holding on to a little bit and saying how this war will impact. We are hoping that in the 60 days, this will all subside and think we will move back to normal. And the second impact on the U.S., not in the U.S. globally maybe, but more so on the U.S. side is the AI component where it has definitely impacted customers expecting efficiencies, customers wanting to see what AI brings into the market and how they will be able to utilize it. So obviously, workflow optimization, infrastructure optimization, utilization of AI in all of the areas of their business is being considered. So it's more at a planning stage for larger enterprises and small enterprises at this point. But that customers are asking us how are you building efficiencies into your delivery to us, et cetera.

A couple of more points to add. We are having a lot of client inquiries when it comes to the AI or AI enablement of the core. What is happening is we are -- everybody is interested. We are having a lot of use cases that customers want us to solve it. But when it comes to the signing is where it's getting stopped, which is what Srini was alluding to. The war has put some uncertainty on the economy. And because of that, at the final stages when all the contract negotiations have happened, initiating or kick starting the project is where the delays are happening. With hopefully that announcement that Iran and U.S. have entered into or very close to the deal, we should start seeing the starts taking off. And once -- if you start to take off, what happens is everybody else will start looking at it and saying, "Okay, hey, we're going to be left out if we don't do anything in the AI space," and we expect that to be happening. And people are going to start asking us for newer use cases or new customers are going to come in. The pipeline is big when it comes to the AI-led enablement and/or AI to the core, which we are very good at, and that is something that's going to take off in the next quarter or so is what the belief that we have when it comes to the U.S. markets. Now answering the question on acquisition-led growth. Yes, we are always looking for new areas that we want to penetrate, new customers that we want to acquire. In that, we are always constantly looking for something to -- companies to acquire that fit into the 2 or 3 strategies that we have, the 3 strategies that we have. We talk about that. One is we buy a company only for its customers, geographical penetration and/or increasing our capability in certain example is what Komori, we acquired because we had the ServiceNow capability, but we didn't have the depth and on the partnership level that Komori has brought to us. That's what we look at. And financial is never that I mean, the mean -- by financial I'm talking about the top line is never a consideration when we do an acquisition.

[Operator Instructions]

Let's give a couple of more minutes. If there's nobody in the queue we'll end the call, but just looking for more questions, anything that we can answer. There's a lot of great work that we're doing. It's just that sometimes we are not doing a good job of presenting to our investors as well as to the market. We would -- we are working very hard to change that. And we're making a lot of efforts when it comes to the PR-related activities and our new product announcements that we have done. While we are waiting for the queue probably, Karanjit, can you talk about the 2 recent announcements that we did when it comes to the product and how it would benefit our customers, the T1 and the Fenix one.

Yes. Sure. So basically, there are 2 announcements that we have made around 2 products. So one is in the AI-led modernization space. So in fact, we are working with a customer to modernize legacy ERP to a next-gen language. In fact, it is from a 3GL third-generation language to a newer language like .Net. And we basically have -- it's a completely first native approach where we have actually created our own framework and we call it Phoenix.AI, which involves writing our own agents, which are again written on top of -- apart from everything else also leverages a lot of Claude. So we -- and we are -- it's almost almost 80% to 90% of the code that gets converted is omitted using this agent. So that was one of the PRs that went out. The other one is in the data space. So this is something that we call the Strategy.AI. It is a framework. So in data, there is a lot of -- you can leverage a lot of workflows and all can actually be automated using AI. So that's the framework that we have built on top of existing frameworks that we have. In fact, this was done in response. We're working with a global consulting company, a management consulting company and building it alongside with inputs from them. And this will help us basically help get -- so if you see some of you must have heard of this thing right saying that your AI is only as good as your data. So this is a platform that will help enterprises get their data in shape so that it is ready for the AI work that you can do on top of it. So that's another PR that went out, I think, a couple of weeks back. So these 2, I think, are actually validation of some of the AI good work that we are doing and we are also going to productize these so that these can be taken to more customers in a more standardized form and help them accelerate driving value. Thank you, Niranjan. Back to you.

Thank you, Karanjit. So just to give you a perspective on the Phoenix product, what the products that are currently available in the market, which is something that the customer wanted us to use was at best doing between 20% and 30% of the conversion, whereas the product that we have built is doing above 80% of the core conversion modernization. So this is something that many, many legacy products out in the market could be transformed to the new age micro services-based AI to the core using like Karanjit Singh said agentic AI and with cloud is enabling us to do the conversion. From what we have heard is that the market charges a premium when it comes to this conversion. And when you have millions of lines of code, Karanjit, what is this customer that they're converting, how many lines of code is it?

This is about 4 million lines of code.

Okay. And typically, right -- -- thank you, Karanjit. So 4 million lines of codes need to be converted. Typically, what we have heard in the market is anywhere between $1 to $2 is what the customers are -- the IT companies are charging to convert the code. So that gives you a perspective of what the market conditions are as well as what market cost it is to convert these lines of codes and many people are doing. Once one does it, right, the competitors are coming in and saying, okay, why can't we do it for us too. So that's how the market works and just waiting for this war to end and things to take off. everywhere in the world. Steve, back to you. Steve, any other questions we have?

Yes, sir. We have one question from Vamshi with Genpact.

How is the AI adoption in the company?

Karanjit, can you talk about that, Karanjit?

Sorry, can you repeat the question? I could not get it clearly.

How is the adoption of AI within the organization?

Okay. All right. Yes. So yes, we have been iteratively adopting AI and we can -- so we can happily say that at least from whatever we benchmark ourselves, we are on the leading edge of this. So about a year back, some of you who've been on our call, we spoke about -- in fact, I started with basically leveraging AI in the QA as well as the product management space, which is like the whole writing stories, test cases, right, those kind of things. The next phase was development. In fact, we standardized on using Copilot for all our projects. But of course, this changes and Claude has been -- is having a little bit of a lead at this point. So we've been iterating, and also the project that I just spoke about, right, AI-led modulation. So a lot of these things, we iteratively keep experimenting with products and then keep pushing back to all the projects. So we've been iteratively doing it and keep on adopting it. So we would like to believe that we are at the leading edge of this adoption. Interestingly, also related to that, a lot of our customers I think Niranjan spoke about it. A lot of our customers, AI is being -- we're having 2 kinds of conditions. So one conditions are around leveraging on their actual business basis. But interestingly, we're also having a lot of customers come back to us and saying, "Hey, tell us how are you using AI in your own SDLC." And we have actually done a lot of workshops or 2-way connections with a lot of customers, where we have been basically making them aware of how we are leveraging this and a lot of them actually have gone back and -- so previously, customers were reluctant to use AI in their development, but I think most of them have gone past that and seeing our adoption. They'll come back saying that, "Hey, even in the T&M agreement, we are pushing us saying, where is sales approval for getting licenses and please have your teams leverage even in our work." So that's kind of been our experience. And of course, all these changes every like quarter, it keeps changing. Given the Zourney platform that I spoke about, we are developing it with a -- not only as AI native ground up platform, but also the SDLC is completely AI-led so that we can basically make it faster time to market as well as be more productive.

Thank you, Karanjit. And just to talk about a little bit more than the Zourney since Karanjit bought it up. The initial estimates that were given was for 18 months be completed. But using cloud and the agent AI capabilities that we have built now. The expectation is that we would have 80% of the solution completed within one quarter. And then the next quarter is when you do all the finishing of it. So that gives you a perspective of the capability that we have built in-house as well as what we're doing to leverage some of the tools that are out there in the market. Like Karanjit said, right, every quarter, things change. We adopt to it since we are what we call ourselves born digital, right? Now everything for us is AI and AI enablement to the core, not just talking about the superficial one. We're also taking AI to the core instead of just doing a slap on. We do it from ground up. And that is giving us a lot of credibility in the market. The customers are coming back that Karanjit was talking about, how we're using this versus just telling us build this use case, now they're asking us, let's collaborate, let's figure out how you can enable us and take AI to the core. So I want to stop here. And Steve, any other questions that we have.

No, no further questions. You can go ahead with your closing comments.

Okay. Thank you, Steve. Thank you, everyone, for joining our earnings call. We appreciate you showing continued faith in us and in the next phase of our growth of taking AI and AI enablement and AI to the core, which is what we are focused on. And many, many customers are reaching out, the pipeline is increasing. It's just a matter of having one of these global conditions to stop and then you should see the growth momentum coming back for us. Thank you, everyone, and looking forward to talking to you soon. I think the next one is probably going to be our AGM. But if there is -- we have a June earnings, too. So once the June earnings happen, the AGM is there, looking forward to talking to you during the next earnings call and on the AGM. Thank you, everyone.

Thank you. On behalf of Kellton Tech Solution Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.