Kellton Tech Solutions Limited — Q3 FY26 earnings call

Call held 13 Feb 2026

Management summary

Kellton Tech delivered a robust Q3 FY26, demonstrating sequential growth in revenue, EBITDA, and PAT, alongside strong year-to-date performance. The company is strategically integrating AI across its services, achieving significant efficiency gains in outcome-based projects and enabling new business. The acquisition of Kumori Technologies has bolstered its ServiceNow capabilities and global market reach. However, the immediate translation of AI efficiencies into higher margins is challenged by client demands for shared cost benefits and varying client readiness for AI adoption.

Highlights

  • Revenue for Q3 FY26 reached ₹308 crores, marking a 2.7% sequential growth over the previous quarter's ₹300 crores.

  • EBITDA for Q3 FY26 was ₹39.7 crores, a 5% increase from ₹37.8 crores in Q2 FY26.

  • Profit After Tax (PAT) for Q3 FY26 stood at ₹25.5 crores, reflecting a 5.8% growth from ₹24 crores in Q2 FY26.

  • Earnings Per Share (EPS) for Q3 FY26 improved significantly to ₹0.50, up 25% from ₹0.40 in Q2 FY26.

  • For the nine months of FY26, revenue grew 11.45% YoY to ₹905 crores, with EBITDA increasing 13.56% YoY to ₹113 crores.

Concerns

  • Management noted difficulty in quantifying the direct positive impact of AI-driven efficiencies on margins, as clients often demand a share of the cost savings.

  • A majority of Time & Material (T&M) clients are currently not ready to adopt AI, limiting its immediate application and the full realization of its benefits across the client base.

Key financials

2 periods

Headline

  • Revenue
    ₹308 Cr
    QoQ +2.7%
  • EBITDA
    ₹39.7 Cr
    QoQ +5%
  • PAT
    ₹25.5 Cr
    QoQ +5.8%
  • EBITDA Margin
    12.9%
  • PAT Margin
    8.3%
  • EPS
    ₹0.5
    QoQ +25%

9M FY26

  • Revenue
    ₹905 Cr
    YoY +11.5%
  • EBITDA
    ₹113 Cr
    YoY +13.6%
  • EBITDA Margin
    12.5%
  • PAT Margin
    8%
  • Diluted EPS
    ₹1.4

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

low confidence
The company secured 11 new client wins in Q3 FY26, including product engineering for a global technology giant, legacy modernization for a monolithic ERP, AI-driven orchestration for heavy engineering, and ServiceNow implementations for healthcare and telecom providers.

Source: Prepared remarks

Capital allocation

medium confidence
  • M&A Kumori Technologies Acquisition · Closed

    Deepened expertise in ServiceNow, achieved a higher partnership level with ServiceNow, and enabled better access to more customers by leveraging Kellton's sales arm and global reach, combining with Salesforce capabilities for global outreach.

    I am Rohit from Pune, a retail investor. Congratulations on acquiring Kumori Technologies. And I have one question. How does Kumori Technologies acquisition contribute to Kellton's growth? ... Kumori gave us some more expertise and a much deeper expertise when it comes to delivering, using services, using ServiceNow. Now we are at a different level of partnership with ServiceNow, and that is going to give us, better access to more customers.

What to watch in Q4 FY26

Progress in Data Center CAPEX opportunities

next quarter
Current In discussion/RFP stage for large data centers
Target Securing new contracts or moving to advanced stages of engagement

Why it matters

This represents a new, large-scale growth opportunity for the company, and progress will indicate diversification and new revenue streams.

We are still in the discussion stage, we are not at a proposal stage yet. We are responding to RFPs and we are going and presenting.

Risks & concerns

  • AI-driven pricing pressure and margin impact

    medium

    While AI brings 20-30% efficiency gains, customers often demand a share of these savings, making it difficult to quantify or realize direct margin expansion.

    Management acknowledged

  • Client readiness for AI adoption

    medium

    A majority of Time & Material (T&M) clients are currently not ready to adopt AI, limiting its immediate application and the full realization of its benefits across the client base.

    Management acknowledged

  • Normalization of AI skill premium

    low

    AI skills command a premium for a short period (approx. 1 year), after which the Indian IT industry quickly learns, leading to normalization of rates and reduced competitive advantage.

    Management acknowledged

Q&A highlights

4 direct
AI Impact on IT Services and SaaS Platforms Direct
The SaaS apocalypse that happened with the drop in share price values of all these SaaS platforms was, I mean, you can already see right now that things are improving and things are going back up. It was just a market reaction to something that Anthropic Claude released, right, recently. It released nothing but about 11 or 12 widgets or plugins, which are open source that seem to do a lot of stuff. But in reality, they are nothing but some workflow automations that was built about by actually logical steps going through.

Addresses analyst concerns about AI's disruptive potential on SaaS platforms and IT services, with management clarifying that the impact is more on efficiency expectations than outright replacement.

Asked by Jayaprakash from Axler Research

Data Center CAPEX Opportunity Direct
Yes, absolutely we have deep expertise when it comes to data center, both from setting it up our data centers as well as managing and maintaining data centers. So, we are actually partnered with a physical setup guy to cater towards one of the largest data centers in the world. We are still in the discussion stage, we are not at a proposal stage yet. We are responding to RFPs and we are going and presenting.

Reveals a new potential growth avenue for Kellton Tech in the data center space, indicating active pursuit of large-scale projects.

Asked by Jayaprakash from Axler Research

Productivity Gains and Margin Impact from AI Partial
So, that has been our experience, about 20% to 30% general gains. And this is being rolled out internally to every project. I also made a mention in my first part of my comments, where we said we are doing this translation, or basically a legacy modernization where we are converting a language to, let us say, a modern Microsoft.NET architecture. Now this is a big deal. It is 4 million lines of code.

Highlights significant efficiency gains (20-30%) from AI in outcome-based projects, but also the challenge of translating these into higher margins due to client demands for shared benefits.

Asked by Pratik Dedhia

Client Resistance to AI and Pricing for Non-AI Contracts Direct
Okay, majority of our customers are telling us we cannot use Al, Pratik. The reason for that is that they are still not ready for Al. See some of our customers when you do a sales pitch also, you know specifically this is happening in the US. They are saying, hey, if you are going to talk about Al, please do not come to me.

Provides insight into the current client sentiment regarding AI adoption, indicating a significant portion of clients are not yet ready, which impacts the company's ability to fully leverage AI.

Asked by Pratik Dedhia

Contribution of Kumori Technologies Acquisition Direct
Kumori gave us some more expertise and a much deeper expertise when it comes to delivering, using services, using ServiceNow. Now we are at a different level of partnership with ServiceNow, and that is going to give us, better access to more customers. What Kumori has given us is a ready-made partnership with deeper expertise.

Explains the strategic rationale behind the Kumori acquisition, emphasizing enhanced ServiceNow capabilities, higher partnership status, and expanded market access.

Asked by Rohit

2 min read 6 chapters

Detailed narrative

Q3 FY26 Financial Performance Overview

Kellton Tech reported a strong Q3 FY26, with revenue reaching ₹308 crores, a 2.7% sequential increase from ₹300 crores in the previous quarter. EBITDA grew 5% QoQ to ₹39.7 crores, and Profit After Tax (PAT) increased by 5.8% QoQ to ₹25.5 crores. The company's EBITDA margin stood at 12.9%, and PAT margin was 8.3%. Earnings Per Share (EPS) saw a significant 25% QoQ jump to ₹0.50.

9-Month FY26 Financial Performance

For the first nine months of FY26, Kellton Tech achieved a revenue of ₹905 crores, representing an 11.45% year-over-year growth compared to ₹812 crores in the same period last year. EBITDA for the nine months was ₹113 crores, up 13.56% YoY from ₹99.5 crores. The EBITDA margin for 9M FY26 was 12.5%, an improvement from 12.2% in the prior year, and the PAT margin was 8%, up from 7.4%.

Strategic Focus on AI and Partnerships

The company is strategically focused on leveraging AI and strengthening key partnerships, particularly with ServiceNow and Microsoft. Management highlighted the achievement of the highest level of Microsoft solution partner designation across data and AI, digital and app innovation, and infrastructure. The acquisition of Kumori Technologies has significantly deepened Kellton's ServiceNow expertise, enabling a higher partnership level and better access to global customers across the US, APAC, and Europe.

AI-driven Operational Efficiency and New Business

Kellton Tech is actively using AI to drive operational efficiencies, reporting 20-30% efficiency gains in outcome-based projects, especially in areas like QA testing, documentation, and development using tools like CoPilot and proprietary KAI platform. AI is also enabling new business, such as a 4 million lines of code legacy modernization project that would have been cost-prohibitive without AI, demonstrating AI's role in making previously unfeasible projects viable.

Client Dynamics and AI Adoption

Management noted a mixed landscape regarding client AI adoption. While AI offers significant efficiencies, a majority of Time & Material (T&M) clients are currently not ready to adopt AI, often explicitly requesting its exclusion. For outcome-based contracts, where AI is used internally, clients frequently demand a share of the efficiency gains, making it challenging to translate these directly into higher margins. However, management anticipates that market forces will eventually drive broader AI adoption among enterprises.

Data Center CAPEX Opportunity

Kellton Tech is actively exploring opportunities in the data center CAPEX space, leveraging its deep expertise in both setting up and maintaining data centers. The company is partnered with a physical setup provider and is currently in the discussion and RFP stages for potentially catering to one of the largest data centers globally, positioning itself as a front-runner in this emerging area.

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