Kellton Tech Solutions Ltd | Looking To Trade on FY21 PE OF 7.3x, we place our target at Rs. 103

1. 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 Cloud’s 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 Source: Ace equity, Dealmoney research, company 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 Qtr Earnings (in Rs. cr) 35.2% 31.5% 26.3% 19.0% 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 6th January 2021 • Equities • Commodities • Wealth • Mutual Funds • Insurance 1

2. Kellton Tech Solutions Ltd. CONSOLIDATED INCOME STATEMENT INCOME STATEMENT (INR Mn) Revenue from operations Other Income Total Income Total Expenses EBITDA EBITDA Margin Depreciation Finance Cost PBT Tax Profit After Tax PAT Margins EPS (INR) PE(x) FY17 FY18 FY19 FY20 FY21 6,148.0 7,835.0 8,141.0 7,707.0 8,477.7 37.0 27.0 51.0 6,185.0 7,862.0 8,192.0 7,746.0 8,533.7 5,328.0 6,650.0 6,962.0 6,583.0 6,951.7 857.0 1,212.0 1,230.0 1,163.0 1,582.0 13.9% 15.4% 15.0% 42.0 54.0 67.0 103.0 163.0 189.0 712.0 995.0 974.0 181.0 311.0 205.0 531.0 684.0 769.0 8.6% 8.7% 9.4% 5.4 6.6 7.8 23.0 17.9 15.9 39.0 56.0 15.0% 128.0 164.0 871.0 1,274.0 165.0 705.0 1,019.7 9.1% 7.7 17.3 18.7% 144.0 164.0 254.3 12.0% 10.6 7.3 • Equities • Commodities • Wealth • Mutual Funds • Insurance 2

3. Kellton Tech Solutions Ltd. Analysts: - Pragnesh Jain- Research Head Rohitkumar Rai - Research Analyst pragnesh.jain@dealmoney.in rohitkumar.rai@dealmoney.in For private circulation only Website: www.dealmoneyonline.com SEBI Research Analyst Registration No: INH000002319 DISCLAIMER regulatory authority for accessing /dealing in securities Market and no material disciplinary action has been taken by SEBI/other regulatory authorities impacting Dealmoney’s Equity Research Analysis. Dealmoney or its associates/analyst including its relatives do not hold any actual/beneficial ownership of more than 1% in the company/ies covered by Analyst (hereinafter referred to as “Subject Company/ies”). 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Dealmoney is in the process of making an application with SEBI for registering it as a Research Entity in terms of SEBI (Research Analyst) Regulations, 2014. Dealmoney or its associates has not been debarred/ suspended by SEBI or any other • Equities • Commodities • Wealth • Mutual Funds • Insurance 3