Kellton Tech Solutions Limited

228 crore

financial highlights during the last quarter, which is the Q2 of FY23. Other revenues were around 228 crores, which is about a 9.1% increase year on year, with an EBITDA of 26 crores and a net profit of 16

9.1%

the last quarter, which is the Q2 of FY23. Other revenues were around 228 crores, which is about a 9.1% increase year on year, with an EBITDA of 26 crores and a net profit of 16 cores. So the EBITDA ma

26 crore

er revenues were around 228 crores, which is about a 9.1% increase year on year, with an EBITDA of 26 crores and a net profit of 16 cores. So the EBITDA margin was slightly dipped; it's 11.4% in the PAT of

11.4%

n EBITDA of 26 crores and a net profit of 16 cores. So the EBITDA margin was slightly dipped; it's 11.4% in the PAT of 7.4%. The earnings per share for this quarter has come down to ₹1.81, which is an in

7.4%

s and a net profit of 16 cores. So the EBITDA margin was slightly dipped; it's 11.4% in the PAT of 7.4%. The earnings per share for this quarter has come down to ₹1.81, which is an increase over the la

₹1.81

ly dipped; it's 11.4% in the PAT of 7.4%. The earnings per share for this quarter has come down to ₹1.81, which is an increase over the last quarter. Coming to the six-month numbers, revenue is around 44

rs,

r has come down to ₹1.81, which is an increase over the last quarter. Coming to the six-month numbers, revenue is around 445 crores, which is about a 7.5% year-on-year increase in EBITDA of about 51 cro

445 crore

81, which is an increase over the last quarter. Coming to the six-month numbers, revenue is around 445 crores, which is about a 7.5% year-on-year increase in EBITDA of about 51 crores, a net profit of 33 cr

7.5%

the last quarter. Coming to the six-month numbers, revenue is around 445 crores, which is about a 7.5% year-on-year increase in EBITDA of about 51 crores, a net profit of 33 crores. The EBITDA margin i

51 crore

bers, revenue is around 445 crores, which is about a 7.5% year-on-year increase in EBITDA of about 51 crores, a net profit of 33 crores. The EBITDA margin is around 11.6%, and the PAT margin is 7.4%. The e

33 crore

crores, which is about a 7.5% year-on-year increase in EBITDA of about 51 crores, a net profit of 33 crores. The EBITDA margin is around 11.6%, and the PAT margin is 7.4%. The earnings per share was around

11.6%

year increase in EBITDA of about 51 crores, a net profit of 33 crores. The EBITDA margin is around 11.6%, and the PAT margin is 7.4%. The earnings per share was around 3.6% for the six months of this fin

“We will look at it and expect more progress over the next few quarters.”

“And so on, they continue to show that they will grow.”

“So overall, we see from our customer’s perspective that they're planning for growth; we expect the growth to be there in 2023, as well as in this last quarter of 2022.”

“Do you think we should now aim for an operating margin close to 18% to 20% as it is far, far lower than the industry standard?”

“How do we get economies of scale going while we are operating in silos, that exercise is almost complete, so we should start seeing an increase in operating margins starting next year; I'm talking about the fiscal year.”

“Yeah, 200 million is what the target is by 2025 is what we targeted.”

“That's why I said I will be happy to have a separate call with you to walk you through the cash flow.”

“So initially the revenue is going to be will be less compared to what it is going to be in the following next few quarters so that is the trend that has happened and that's across every company, that's the way it is.”

“So there is going to be growth in order to achieve that, we have to do a CAGR of close to 25% to 30%.”

“OK next quarter is this going to be this much revenue growth or things like that.”

Niranjan Chintam

7

Neranjan Chheda

2

Karanjit Singh

1

Rajesh Mundra

1

Moderator

1

Niranjan Chintam

Kellton Tech Solutions Ltd Earnings Conference Call Nov 15, 2022 Ladies and gentlemen, good day, and welcome to the Kellton Tech Solutions Q2 and FY23 Earnings Conference Call. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing * then 0 on your touch-tone phone. I would like to thank you all for participating in the company's earnings call for the second quarter of the financial year 2023. Before we begin. I would like to mention a short cautionary statement. Some of the statements made in today's conference 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 the management's beliefs as well as assumptions made from information curre

Karanjit Singh

of the top ten software development companies in India. We have started our brand refresh - the one Kellton initiative - that we've talked about during the last six to seven months. So right now, our website has migrated from kelltontech.com to kellton.com. We are also working with an external agency to help us refresh our brand and get more brand recognition. The agency is based in New York and has come up with some preliminary analysis. We will look at it and expect more progress over the next few quarters. We also participated in a few SAP events. So these are some of the highlights that we have from an operational side for the last quarter. Karanjit, can you talk about the customer wins we had in the last quarter? So, as Niranjan said, we've added 10 new customers to our portfolio, and these wins are quite interesting. A lot of our customers this quarter had been on the newer technology, which is Web3, NFT marketplaces, and data engineering. Some of these clients are in the renewab

Niranjan Chintam

is the first question Ladies and gentlemen, we will now begin the question and answer line of Neranjan Chheda, from session. Our an individual investor. Please go ahead. So I have a list of questions for you, Sir, and your team, and you can add more colors based on what you have seen happening in the industry. Plus, where our company is heading and where we see ourselves in the coming quarters. So I’ll go one by one quickly. So the first question is on its operating margin. The industry or, more specifically, our competitors have an operating margin of 25% to 30%, you can look at any mid-size or large-size company. I just wanted to know why Kellton has a 12% operating margin. Do you think we should now aim for an operating margin close to 18% to 20% as it is far, far lower than the industry standard? This is my first question. Also, how long would it take us to achieve this goal? The first thing is, we have noticed that this was a discussion that we had for the last few years on how to

Niranjan Chintam

a little over 1500 to 1800 plus employees is what we have today, and that is growing. So the base in India is increasing. The increase in employees is significantly higher in India. If we talk about 80-20, 80% of the growth in the employee base is coming from India, and 20% in the US as this trend goes on, we will see a lot more margin improvement when it comes to the operating margins growth to start up with gross margin and then constructing knowledge. Thank you, so I was about to ask you about the employee mix. I think you've already answered that. I'll go to the next question now. Our balance sheet says that we have close to 100 crores of borrowing. And for that to operate that auto finance back, they're paying close to 12 crores of interest every year. So roughly, I will say it is in the range of 11% to 12% of the total borrowing. Or what we hold now again, this is exactly in line with our operating profit margin, so ideally, in a nutshell, this number says that this borrowing is

Niranjan Chintam

quarter. I'm not disagreeing with that, but unfortunately, right the business that we are in the way we grew and a lack of, let's say, equity in infusion from outside entities is what, where we are today. I'll go with the next question. So the question is, one year back, you mentioned the company targeting post-300 million USD revenues. Where do we see the traction coming? Here so and by when. Yeah, 200 million is what the target is by 2025 is what we targeted. I think we're still marching towards that, and I think we are given where we are today, we should be able to achieve that. Unless like there is what we call there is a recession or something else happens. So then, in a force measure. That's what we're working with word. Unless the force measure happened somewhere, we should be able to achieve that. Thank you. Our next question is from the line of Rajesh Mundra, an individual investor. Please go ahead. We are unable to hear the participants, so we will move on to the next questio

Neranjan Chheda

So remember that we are paying loans; we're paying earn-outs. We're investing in assets for the company, so those are all the adjustments that happen in cash flow. So the money it's not a write-off, it's just where it is going or where is increase or decrease from the previous time. That's how the cash flow should be read is different from your talking from pure cash in cash out. That is not what this is. This cash flow is adjustments to the previous period to the current period what it is. That's why I said I will be happy to have a separate call with you to walk you through the cash flow. This is an accounting way of treatment. OK, I mean, so are we going to see a server in the future, like from Q3 onwards? So how is going to be number when numbers are going to be on your table? Like whether it is the trajectory on the revenue. I'm just trying to put it together with the current orders. Like you said, 11 customers is being acquired in this quarter. So with that reference, I was just