Kellton Tech Solutions Limited — Q1 FY26 earnings call

Call held 13 Aug 2025

Management summary

Kellton Tech reported a strong Q1 FY26 with consolidated revenue growing 12.8% YoY to Rs.296 crores and PAT increasing 13.5% YoY to Rs.22 crores. The company secured three significant client wins and launched its proprietary agentic AI platform, KAI. While standalone revenue saw a boost from hardware sales, profitability was impacted by lower margins on these sales, and the company plans to segment AI revenue reporting in the near future.

Highlights

  • Consolidated revenue grew 12.8% YoY to Rs.296 crores, with a 3% QoQ increase.

  • Consolidated PAT increased 13.5% YoY to Rs.22 crores, demonstrating strong profitability growth.

  • Secured three significant client wins, including a global beverages leader, a leading US healthcare insurer, and a premier Indian travel technology provider, focusing on AI and automation.

  • Successfully launched KAI, an enterprise-grade agentic AI platform, enhancing autonomous workflow management.

  • Achieved zero downtime during a mission-critical application migration for a large agriculture and food production enterprise.

Concerns

  • Standalone profitability did not increase despite a 15.7% QoQ revenue increase, attributed to lower margins on hardware sales.

  • AI revenue segmentation and specific profitability tracking are not yet established, limiting detailed insights into this key growth area.

Key financials

  1. Consolidated Revenue ₹296 Cr +12.8%YoY
  2. Consolidated EBITDA ₹35 Cr +10.2%YoY
  3. Consolidated PAT ₹22 Cr +13.5%YoY
  4. Consolidated EBITDA Margin 12.1%
  5. Consolidated EPS ₹2.32
  6. Standalone Revenue ₹53 Cr +15.7%QoQ
  7. Standalone EPS ₹0.28

What they filed

Q1 FY27: revenue up 7.1%, net profit down 4.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue271 279 286 295 300 +11%308 +10%314 +10%316 +7%
EBITDA32 34 29 35 37 +16%39 +15%25 −14%34 −3%
Net profit20 21 19 23 24 +20%25 +19%20 +5%22 −4%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

medium confidence

Execution

order book is looking around 10 months

The order book provides approximately 10 months of revenue visibility.

Source: Q&A

What to watch in Q2 FY26

AI Revenue Segmentation

Next quarter or by end of Financial Year
Current Not segmented or tracked separately
Target Reclassified grouping with an AI-only revenue segment

Why it matters

Provides transparency on the growth and contribution of AI services, a key strategic focus for the company.

Probably in the next quarter or so, we will start looking at to reclassify our grouping and come up with an Al only kind of revenue segment, we will look at that and get back to you if there is a realistic way of doing it, that is one.

Risks & concerns

  • Lower margins on hardware sales

    medium

    Standalone profitability did not increase despite revenue growth due to lower margins from hardware sales.

    Management acknowledged

  • Indirect impact of US tariffs on client spending

    medium

    Customers are being careful with spending due to collateral uncertainty from tariffs, though direct impact on services is minimal.

    Management acknowledged

  • Lack of specific AI revenue segmentation and profitability tracking

    low

    AI revenue is not yet segmented, and specific profitability for AI solutions is not tracked, limiting detailed insights.

    Management acknowledged

Q&A highlights

3 direct
US business environment and impact of tariffs Direct
the tariffs that is happening is more on the on the good side, and not the services side. There is no impact directly to us, 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 for the digital transformation typically, the digital transformation initiatives were either done by the IT people, or let's say the digital officers kind of initiatives, whereas the Al part is now driven from the C suite.

Clarifies the direct and indirect impact of macro factors on the IT services business and highlights the shift in AI adoption drivers from the C-suite.

Asked by Gaurav Shah

AI revenue classification and incremental margins Partial
at this point, we have not segmented out Al yet. Probably in the next quarter or so, we will start looking at to reclassify our grouping and come up with an Al only kind of revenue segment... I cannot give you a clear cut answer to what is the margin in that particular segment if you want to call it, because we are not tracking that at this point.

Reveals current limitations in reporting AI-specific financials, which is a key growth area, but indicates future plans for better transparency and tracking.

Asked by Pratik Dedia

Profitability of AI-based solutions Direct
So there is an increase in profitability when we go with Al or Al based solutions is, yes there is an increase in profitability for sure yes.

Confirms that AI-based solutions are margin-accretive, which is a positive signal for future profitability as AI adoption grows.

Asked by Pratik Dedia

Project pipeline and order book visibility Direct
At this point we can only talk about our order book. I just want to make sure that, we clearly differentiate and our order book is looking around 10 months, is what the order book is looking at.

Provides an indication of near-term revenue visibility, which is a crucial metric for IT services companies.

Asked by Pratik Dedia

2 min read 6 chapters

Detailed narrative

Strong Q1 FY26 Consolidated Financial Performance

Kellton Tech reported a robust Q1 FY26 with consolidated revenue reaching Rs.296 crores, marking a 12.8% year-on-year growth and 3% quarter-on-quarter growth. The company's PAT also saw a significant increase of 13.5% year-on-year, totaling Rs.22 crores. Consolidated EBITDA stood at Rs.35 crores, representing a 12.1% margin and 10.2% YoY growth, with an EPS of Rs.2.32.

Strategic Client Wins and Proprietary AI Platform Launch

The quarter was marked by three significant client wins, including a global beverages leader for compliance solutions, a leading US healthcare insurer for security integration, and a premier Indian travel technology provider for backend AI engineering. Furthermore, Kellton Tech launched its proprietary enterprise-grade agentic AI platform, KAI, designed to autonomously manage workflows and integrate with enterprise systems for enhanced efficiency and decision-making.

Operational Excellence and International Recognition

Kellton Tech demonstrated strong operational capabilities by successfully migrating a mission-critical application for one of the world's largest agriculture and food production enterprises to a modern platform with zero downtime. The company also gained international recognition by being invited to the NATO conference in Finland, where its project outcomes and ability to address complex client challenges earned praise.

Standalone Performance Driven by Hardware Sales

On a standalone basis, Kellton Tech reported a top line of Rs.53 crores, reflecting a 15.7% increase over the last quarter. This growth was primarily attributed to a significant hardware component from a recently won Oil India contract. However, management noted that standalone profitability did not increase proportionally due to the inherently lower margins associated with hardware sales compared to services, resulting in a standalone EPS of Rs.0.28.

Navigating US Business Environment and C-Suite Driven AI Adoption

Management acknowledged the indirect impact of the US business environment, including client caution on spending due to tariff-related uncertainties. Despite this, a strong positive trend was observed in AI adoption, with C-suite executives actively driving AI initiatives for cost savings and profitability. Kellton Tech is strategically engaging directly with CXOs on AI solutions, positioning itself favorably in this evolving market.

Future Outlook on AI Segmentation and Order Book Visibility

While AI revenue is not yet separately segmented, management plans to reclassify its reporting to include an AI-only revenue segment within the next quarter or by the end of the financial year. They confirmed that AI-based solutions are margin-accretive. The company's current order book provides approximately 10 months of revenue visibility, and efforts are underway to further improve this metric.

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