KELLTON Tech

Kellton Tech Solutions Ltd - BASIC INFORMATION

Kellton Tech Solutions Ltd., incorporated in the year 1993, is a Small Cap company (having a market cap of Rs 316.76 Cr.) operating in Information Technology sector.

CATALYST FOR GROWTH

• Massive expansion plans. Company made a whooping total of 8 acquisitions in last three years.

• Synergic growth in revenue and earnings because of the acquisitions.

• Investments in future technology which has potential to grow fast.

• Promoters and management increasing stake in company.

• Revenue expected to increase 3.5 times for next fiscal.

Kellton Tech Solutions Ltd - RECOMMENDATION

With experienced promoters, strong margins and its planned expansion KELLTON will be able to grow exponentially over the next few years. We recommend BUY on the stock at CMP of Rs. 75 to target of Rs. 113 (PE of 23.74x March FY16) over next 1 year.

Kellton Tech Solutions Ltd - BUSINESS DISCRIPTION

Kellton Tech Solutions Limited is a global software services company providing consulting, systems integration, and outsourcing solutions to clients in key industry verticals worldwide. It provides a mix of expert industry knowledge, process and technology framework, robust associations, and a skilled, global workforce to offer solutions that create viable results.

The Company’s full services portfolio consists of Consulting, Enterprise Solutions, Application Development and Management, Internet and Emerging Technologies, Information Management, Outsourcing Services and Mobility Solutions.

Kellton Tech's expertise in technology is wide ranging. The organization covers the entire technology landscape including, Web, SMAC (Social, Mobile, Analytics, Cloud), ERP-EAI and IoT and proudly displays its expertise in enabling web based solutions, creating hyper-intelligent solutions through new age architectures (SMAC and IoT) and providing Enterprise Resource Planning services to businesses.

Some of the major clients include Flipkart, Jabong, Nestle, GE, Sony, MakemyTrip, Nokia, PVR, GroupOn.

PRODUCTS OFFERED

KLGAME™ is designed in a fashion to serve many verticals ranging from stadiums, museums, to retail and airlines. A museum/ store / mall can utilize this platform as a museum guide/ goods locator/ to push offers and coupons etc. It consists of Mobile SDK which resides on mobile phone/ wearable devices and connects with the beacons to fetch beacon location & related data and Engine which continuously fetches user location from mobile applications and stores it in the database.

Kellton Tech Mobility Platform is a location-based application platform comprising features such as geo-location, bar code/QR code, dynamic mobile forms, voice-to- text, unified notification, etc. The platform addresses the need to manage mobile work-forces, mobile resources and out-door industry processes like inventory, supply chain and warehouse management through BlackBerry and Play Book applications making your enterprise truly mobile in each aspect.

Drupal Wizard gives you the APIs to build forms by merely specifying the details of the form. It will create the underlying HTML on its own provided you just specify the fields you want in it.

Kellton Tech builds a connected world. Kellton Tech's IoT helps organizations connect and engage with the customers.

ACQUISITIONS

Company made a whooping total of 8 acquisitions in last three years. Some of the recent transactions are mentioned bellow.

• ProSoft Group: acquired in May 2015, which consists of four companies – ProSoft Technology Group Inc, Intellipeople Inc, Cyber-World Solutions Inc and ProSoft Business Solutions LLC. It is a leading edge, global IT service provider. These services include Enterprise Resource Planning, Business Process Management, Business Integration Services, Service Oriented Architecture, Business Activity Monitoring, Enterprise Portals and Cloud Solutions. ProSoft has strategic partnerships with leading software companies like SAP (Services Partner), IBM (Premier Partner & Reseller), SoftwareAG (NA Associate Partner and Reseller), Microsoft (Gold Certified Partner) and Oracle (Partner) to provide the best value to our customers with a professional difference.

  Media report suggests it has agreed for $14 million dollar earn-out agreement for 3 years for the acquisition, which adds $40 million to the top line and $3 million to bottom line of Kellton’s balance sheet. Acquisition was mainly to strengthen customer base especially in the ecommerce space.

SUBSIDIARIES - Kellton Tech Solutions Ltd as on 30/07/2015

• Skan DbyDx Software Pvt Ltd. is a worldwide provider of outsourced product development and consulting to emerging and established technology companies.

  With a staff of over 150 highly skilled personnel, DbyDx core competency lies on mobile application, Rich Internet Application (RIA) development & quality assurance. DbyDx Software has Global Delivery Centers in United States and Asia.

• Supremesoft Global Inc, offers technology consulting services tailored for the public sector or private industry. It provides Web 2.0 design; cloud computing, social network software, mobile application development and automation testing, content management, online video publishing, e-commerce and Microsoft Office solutions. It caters to companies in media and entertainment, publishing, advertising, education, retail, software companies and finance. Supremesoft also serves clients at all levels of public service: Federal, state, and local.

  The acquisition adds a revenue of 9 million USD and furthers Kellton Tech’s involvement and expertise in the areas of IT application development, cloud computing, mobility solutions and data analytics. Some of the clients include Microsoft, Oracle, Sun Microsystems, and IBM.

• eVantage Technologies Inc – which provides enterprise consulting solutions and application outsourcing to multi-national corporations. It offers solutions to Enterprise Application Integration(EAI), Dataware Housing areas, SAP DIAW, eDocxpress – which electronically stores, retrieves, redacts ad pints documents for delivery to request and eImmigate – a workflow- based immigration software with back office support.

  The acquisition enhanced Kellton Tech’s capability and expertise in the areas of service-oriented architecture, ERP, EAI and Business Intelligence.

• VIVOS IT Solutions and Services which provides staffing & consulting solutions in diverse fields such as Management, Healthcare, Life Science and Government Services with strong focus on Healthcare & Life Sciences Industry.

  Its key customers include Alcon, Covance, ETrade, Emergent Bio-solutions. It was funded by 100% disinvestment in MCS Global-which expertise in building enterprise software solutions through Consulting; End to End Product Engineering, Staff Augmentation, and strong offshore development practice.

MANAGEMENT AND GOVERNANCE

Company was established in 1993 but the new management took company in 2009. They have started building strategies aggressively since then. Number of employees now stands at 650, 450 in India and 200 in US. Now with the acquisition the strength has increased to 1000+. Promoters in the company have increased the stake from 57.3 to 62.8% showing they believe in their own performance.

GENERAL - TOP MANAGEMENT as on 27/07/2015

INDUSTRY OVERVIEW AND COMPETITIVE POSITION

The Indian software industry’s exports grew by about 13% in fiscal year 2014 to $87 billion (around Rs.5.4 trillion), driven by its ability to offer solutions that integrate new business models such as analytics and cloud-based services, which are part of SMAC (cloud, mobile, analytics, big data and social media services) with traditional ones, according to Nasscom’s Strategic Review 2014 report. Indian IT vendors will generate at least $225 billion in SMA