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Kellton Tech Solutions Ltd.
CMP Rs 71.15
Target Rs103
Kellton Tech Solutions Ltd. (Kellton) is a new
age IT services company with global footprint in
the US, United Kingdom, Ireland, Singapore, and
India. The Company offers digital solutions,
advisory services, along with serving as systems
integrator to over 300 clients globally, ranging
from start-ups to Fortune 1,000 enterprises. The
company has vast experience in rendering its
services to various industry verticals such as
retail and e-commerce travel, tourism and
hospitality healthcare, energy, BFSI media,
entertainment and lifestyle, amongst others. The
company has meticulously built a comprehensive
and impressive portfolio through strategic
acquisitions in the United States, India, and
Singapore. Digital Transformation will enable
the company to grow further COVID-19 crisis has
provided a hidden opportunity and paved a way
for more need of digital transformation as a
critical enabler of future success. The COVID-19
pandemic, however, has forever changed the
traditional behaviors of organisations. The fear
of the fallout has pushed organizations to
incorporate the digital element in everything
they do and operate effectively around stay
at-home orders imposed all across the world.
Leaders are rushing to adopt technology-first
frameworks to enable delivery at scale and drive
customer service relevance. The company have
launched a bevy of measures to offer continued
support to its customers and strengthen their
ability to respond. The company is pumping
strategic investments in its indigenous OPTIMA
platform and offering it under a
subscription-based model to encourage
personalization. They proactively engaged in
exploring more avenues of expansion with a focus
on establishing long-term resilience strategies
that could be instrumental in helping its
customers out maneuver the crisis and better
prepare for future disruptions. New
partnerships to provide synergies for growth
Kellton Tech has Expanded Its Partnership with
Google Clouds Apigee API Platform, to transform
digital user experiences faster and more
seamlessly. It also announced Partnership with
Workato to Accelerate Enterprise iPaaS
Integration and Automation. Kellton Tech has
Partnered with Automation Anywhere to Create
End-to-End Transformative Experiences for
Customers. This altogether will provide a path
for the company to further grow its services to
its clients. Valuation We like the company on
the back of Digital Transformation in the all
parts of the economy which will lead to growth
in this sector. The company is trading at an FY21
PE of 7.3x, we place our target at Rs. 103
NSE/BSE Code KELLTONTEC / 519602
Sector IT
Industry IT - Software
Face value/Book Value (Rs.per share) 5 / 46.7
Dividend yield() -
52H/L(Rs.) 86 / 7
Market Cap.(Rs.mn) 12,226
Shares Outstanding (mn) 96.4
(In Rs. mn) FY17 FY18 FY19 FY20
Net Sales 6,148 7,835 8,141 7,707
Sales Growth 71.4 27.4 3.9 -5.3
EBITDA 820 1,184 1,179 1,124
EBITDA Margin 13.3 15.1 14.5 14.6
PAT 531 684 769 705
PAT Margin 8.6 8.7 9.5 9.2
EPS (Rs) 5.6 7.1 8.0 7.3
FY17 FY18 FY19 FY20
P/E (x) 23.0 17.9 15.9 17.3
P/B (x) 6.9 4.7 3.7 2.9
EV/Sales 2.1 1.7 1.6 1.7
EV/EBITDA 15.9 11.0 11.0 11.6
ROE 32.0 34.5 28.1 21.0
ROCE 35.2 31.5 26.3 19.0
Qtr Earnings (in Rs. cr) Q2FY21 Q1FY21 Q-o-Q Q2FY20
Net Sales 190.9 180.0 6.0 186.6
Total Expenditure 165.8 156.7 5.8 156.9
PBIDT (Excl OI) 25.1 23.3 7.5 29.7
PAT 15.879 14.46 9.81 18.491
PBIDTM (Excl OI) 13.13 12.95 1.39 15.92
PBIDTM 13.6 14.03 -3.06 16.27
PATM 8.32 8.03 3.61 9.91
Adj. EPS(Rs) 1.65 1.5 10 1.92
Source Ace equity, Dealmoney research, company
6th January 2021
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Kellton Tech Solutions Ltd.
CONSOLIDATED INCOME STATEMENT
INCOME STATEMENT (INR Mn) FY17 FY18 FY19 FY20 FY21
Revenue from operations 6,148.0 7,835.0 8,141.0 7,707.0 8,477.7
Other Income 37.0 27.0 51.0 39.0 56.0
Total Income 6,185.0 7,862.0 8,192.0 7,746.0 8,533.7
Total Expenses 5,328.0 6,650.0 6,962.0 6,583.0 6,951.7
EBITDA 857.0 1,212.0 1,230.0 1,163.0 1,582.0
EBITDA Margin 13.9 15.4 15.0 15.0 18.7
Depreciation 42.0 54.0 67.0 128.0 144.0
Finance Cost 103.0 163.0 189.0 164.0 164.0
PBT 712.0 995.0 974.0 871.0 1,274.0
Tax 181.0 311.0 205.0 165.0 254.3
Profit After Tax 531.0 684.0 769.0 705.0 1,019.7
PAT Margins 8.6 8.7 9.4 9.1 12.0
EPS (INR) 5.4 6.6 7.8 7.7 10.6
PE(x) 23.0 17.9 15.9 17.3 7.3
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Kellton Tech Solutions Ltd.
Analysts - Pragnesh Jain- Research Head
pragnesh.jain_at_dealmoney.in
Rohitkumar Rai - Research Analyst
rohitkumar.rai_at_dealmoney.in
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