Kellton Tech Solutions Limited — Q4 FY25 earnings call

Call held 2 Jun 2025

Management summary

Kellton Tech reported a strong FY25 with ₹1,099 crores in revenue, growing 11.7% YoY, and an EBITDA margin of 11.8%. Q4 FY25 saw 15.7% YoY revenue growth to ₹287 crores, though EBITDA margin dipped to 10.5% due to AI investments and wage hikes. The company secured 9 new client wins, focusing on AI-driven digital transformation, and aims for $200 million in revenue within the next 2-3 years, having recently raised funds via FCCB for working capital and strategic AI acquisitions.

Highlights

  • Full year FY25 revenue reached ₹1,099 crores, marking an 11.7% year-on-year growth.

  • Q4 FY25 revenue grew 15.7% year-on-year to ₹287 crores.

  • EBITDA for FY25 stood at ₹129 crores, with an 11.8% margin, and net profit was ₹80 crores.

  • Successfully delivered complex projects including SAP S/4 HANA go-live for 21 global entities and an AI-powered fuel tracker system.

  • Secured 9 new customer wins in Q4, including projects involving AI-driven platforms for marketing, HR tech, and intellectual property data management.

Concerns

  • Q4 FY25 EBITDA margin was 10.5%, slightly lower than the full-year margin of 11.8%, attributed to investments in AI retooling and the annual appraisal cycle.

  • Increased costs due to wage hikes from the January appraisal cycle impacted Q4 profitability, with bill rates not yet fully adjusted.

Key financials

2 periods

Q4 FY25

  • Revenue
    ₹287 Cr
    YoY +15.7%
  • EBITDA
    ₹30 Cr
  • Net Profit
    ₹19 Cr
  • EBITDA Margin
    10.5%
  • PAT Margin
    6.7%

FY25

  • Revenue
    ₹1,099 Cr
    YoY +11.7%
  • EBITDA
    ₹129 Cr
  • Net Profit
    ₹80 Cr
  • EBITDA Margin
    11.8%
  • PAT Margin
    7.3%
  • EPS
    ₹8.18

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
The company secured nine new customer wins in Q4 FY25, with deals spanning AI-driven platforms for marketing, HR tech modernization, advanced warehousing, and intellectual property data management.

Source: Prepared remarks

Capital allocation

high confidence
  • Debt Debt disclosed
    • New borrowing Raised Foreign Currency Convertible Bonds (FCCB)
    I think we already announced that and we took shareholders permission. I would be happy to answer that the reason why we raised this FCCB is the combination of two things, one to increase our working capital limits because we are making a lot of investment in Al space. The second one is to invest in our subsidiaries overseas. It is going to be a combination of working capital there as well as we are looking for some strategic acquisitions because Al is fast evolving.

Guidance & targets

Revenue

  • Total Revenue Revenue · next 2-3 years · High confidence $200 million
    So, probably you are looking for the revenue numbers but revenue numbers, I have projected out and said right, we want to be around the 200 million in the next two to three years that is the core that we want to reach out and then expand upon it.

    — Niranjan Chintam

Profitability

  • Profitability Growth Profitability · near term · Medium confidence increase
    But, you know our growth is going to be aggressive and our profitability is going to increase as you have seen the numbers right, compared to what it was last year to now.

    — Niranjan Chintam

EBITDA Margin

  • EBITDA Margin EBITDA Margin · next quarters · Medium confidence improving and better
    next quarters you will start seeing that will start improving and you will start seeing better EBITDA numbers compared to what we have for this quarter or the last quarter that we talked about.

    — Niranjan Chintam

What to watch in Q1 FY26

EBITDA Margin Improvement

next quarters
Current 10.5% in Q4 FY25
Target Improving and better EBITDA numbers

Why it matters

To confirm that Q4's margin dip was temporary due to investments and appraisal cycles, and that profitability is on an upward trend as guided.

next quarters you will start seeing that will start improving and you will start seeing better EBITDA numbers compared to what we have for this quarter or the last quarter that we talked about.

Risks & concerns

  • Rapid evolution of AI technology

    medium

    The fast-evolving nature of AI requires continuous investment and strategic acquisitions to keep pace and avoid falling behind competitors, necessitating a 'war chest' for additional capabilities.

    Management acknowledged

Q&A highlights

5 direct
Long-term vision and AI strategy Direct
We want to be known as a global service provider for the Al enabled digital transformation of all solutions that are possible in scaling, starting from scratch, it could be Greenfield or brownfield better fielding it.

Management articulated a clear strategic pivot towards becoming an 'AI-first digital transformation company' and outlined their offerings in this space.

Asked by Ajay Agarwal

Competition with large IT companies (Infosys, TCS) Direct
I do not want to be in those big companies. I will be very honest there right. That is not what we are aiming for. ... From that point of view, right from a technical capability point of view, we are not much, our capability is much better than any of these big boys that you named.

Management clarified their competitive strategy, emphasizing technical capability over scale and setting a realistic revenue target of $200 million rather than competing directly with large-cap IT firms.

Asked by Ajay Agarwal

Reason for Q4 EBITDA margin decline Direct
Look at the whole year where we increased EBITDA by one percent, even the bottom line went up. ... there was a lot of investments made in Al retooling ourselves... The second thing is we have our appraisal cycle in January and typically this quarter is always going to be slightly lower compared to other quarters.

Management explained the Q4 margin dip as a temporary effect of strategic AI investments and annual wage hikes, reassuring that full-year EBITDA improved and future quarters should see improvement.

Asked by Prashant Pani

Levers for growth and transformation Direct
It is a combination of all of them to answer your question Prateek you know. There are going to be higher billings when it comes to Al because not too many people have the ability or capability to provide, right, any, including all the other names that were plotted out there, even though they are saying, they have the capability, they have this many number of people, but we have built so many agents, agents is going to be the next big thing.

Management detailed the multi-faceted approach to drive growth, including leveraging AI capabilities for higher billings, new product development (like the agents platform), and strategic partnerships.

Asked by Prateek Dedhia

Purpose of raising funds via FCCB Direct
I think we already announced that and we took shareholders permission. I would be happy to answer that the reason why we raised this FCCB is the combination of two things, one to increase our working capital limits because we are making a lot of investment in Al space. The second one is to invest in our subsidiaries overseas. It is going to be a combination of working capital there as well as we are looking for some strategic acquisitions because Al is fast evolving.

Management provided clear reasons for the FCCB issuance, highlighting its use for working capital, overseas expansion, and crucial strategic acquisitions to stay competitive in the rapidly evolving AI landscape.

Asked by Brijen Mishra

2 min read 6 chapters

Detailed narrative

FY25 and Q4 FY25 Financial Performance

Kellton Tech concluded FY25 with a total revenue of ₹1,099 crores, reflecting an 11.7% year-on-year growth. The full-year EBITDA stood at ₹129 crores, achieving an 11.8% margin, while net profit was ₹80 crores, resulting in an EPS of ₹8.18. For Q4 FY25, the company reported a revenue of ₹287 crores, a 15.7% year-on-year increase, with an EBITDA of ₹30 crores and a margin of 10.5%. The Q4 PAT was ₹19 crores, with a margin of 6.7%.

Strategic Shift to AI-First Digital Transformation

The company is repositioning itself to be an 'AI-first digital transformation company,' focusing on leveraging AI and data to reengineer client processes. Management emphasized that while they have historically been a digital transformation company, the current focus is on integrating AI into all solutions. This strategic shift aims to enhance their offerings, from AI visioning workshops to core AI product development and implementation.

Q4 Client Wins and Operational Successes

Kellton Tech secured 9 new customer wins in Q4 FY25, including significant projects such as building an AI-driven intelligent survey management platform for a marketing agency and modernizing an HR tech company's systems with AI. Operationally, the company successfully completed an SAP S/4 HANA go-live for 21 global entities and deployed an AI-powered centralized fuel tracker system. They also transitioned a global OTT management platform to a cloud-native architecture, serving 33 million users with zero downtime.

Q4 Margin Impact from AI Investments and Appraisals

The Q4 FY25 EBITDA margin of 10.5% was slightly lower than the full-year average, which management attributed to two primary factors: significant investments in AI retooling and the annual appraisal cycle in January. These wage hikes increased costs, and the corresponding adjustments in bill rates are expected to materialize in subsequent quarters, leading to improved EBITDA numbers.

Revenue Growth Target and Profitability Outlook

Management expressed confidence in aggressive growth, targeting $200 million in revenue within the next two to three years. They believe the company has passed an 'inflection point' and that efficiencies coming into the system will lead to increased profitability and revenue growth. The growth will be driven by higher billings for AI services, new product offerings like the 'agents platform,' industry-specific initiatives, and strategic partnerships.

Capital Allocation Strategy: FCCB for Growth and Acquisitions

The company recently raised funds through Foreign Currency Convertible Bonds (FCCB) to support its growth initiatives. The primary uses for these funds include increasing working capital limits, investing in overseas subsidiaries, and making strategic acquisitions. This capital is deemed crucial for acquiring niche capabilities and keeping pace with the rapid evolution of AI technology, which management views as a 'fast-evolving' and 'continuous whiplash' environment.

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