Kellton Tech - Growing IT company

(v4value) #41

Harpreet any thoughts on their acquisition process? What are they acquiring - clients, ppl.or technology? What allows them to make good acquisitions from a return perspective, so much so they can give targets?

The reason I suspect there is worry is because historically Indian cos have sometimes used small overseas acquisition as a way of funneling cash out of company

(Harpreet Singh) #42

Hi V4value

In such companies acquisitions are primarily for technology and if you are good across other platforms you will be able to mine the clients gained and motivate the people acquired to stay with you

i agree that the concern with indian acquisitions to siphon money is always there …so how to sift a good acq Vs a bad one …it can only be done in an indirect manner

The best way possibly would be to look at the client profile …serious and large brands would work with you only if you are a serious player and have something of value to offer esp in the SMAC space …in this they are doing pretty well

the other thing which i would look at over time is margin expansion …though right now its not expanding as much as one would like to due to hiring etc …it should show up in due course !

(Whipsaw) #43

Typically companies do spell out their intent (not specific names) on the nature of acquisition to be…it could be for missing skills, to add more clients, to get into new geographies, to acquire patents etc. It is strange that Kellton wants to acquire to meet revenue targets and getting into debt trap.

Disclosure: Not invested. In my watchlist for a long time.

(rvetri) #44

Cool guys… Markets exist because of such diverse views. If all of us have
same views, stocks will be only in upward or downward circuits. There will
be no trade. Having said this, my view is - the management is not
consistent in what they say even to the CNBC anchors, keep shifting their
goal posts and numbers they discussed in earlier calls and overpower the
anchors…contradict their guidance etc… Not a good sign… This is not
to say that Kellton will fail…But remember Opto circuits with similar
acquisition strategies… And what happened finally

Disc: Exited Kellton… Invested in 8K Miles

(Harpreet Singh) #45

please study their past acquisitions …you will find they are mostly for tech / one i think was for clients

not sharing ahead of time is a good sign …earlier they have been sharing too much detail which is also not well received

Re debt trap - Check their financials on 31/03/16 there are hardly any long term borrowings against shareholder funds of 80 Cr

hope this helps !

(Harpreet Singh) #46

no worries yaar we are just discussing only…and true all opinions make a market …for every buyer there is a seller too !!

they have never shifted any goal posts …

only that the people misunderstood what Nirajan has been using - the run rate concept often used in US , which we indians are not used to :slight_smile:

opto circuits is an entirely diff thing for many reasons , esp debt.

in Kellton you have promoters increasing their shares …they have bought 30 lac shares at 90 Rs in March '15

also today the public shareholding is entirely indv…moment institutions step …it will be a diff paradigm and please see their announcements …they have recently started participating in these investor conferences …first one they did was Emkay a week or two back …

(v4value) #47

Stock price was in 45-55 range in March 2015. why did they buy at 90?

(Harpreet Singh) #48

the price was 74 when they converted the warrants at 90 …

they went ahead and completed the transaction , for that there can be many reasons …
they increased their stake, shows confidence in the business , infused capital into the company and not converting a warrant wouldnt be a great idea anyway !

(Rajeev M. Parashar) #49

One of us need to look at all the acquisitions & make a list specifying the technology/clients they were acquired for.

(Rajeev M. Parashar) #50

Is ‘ProSoft Technology®: Where Automation Connects’, which provides connectivity solutions that link dissimilar automation products part of the Prosoft Group acquired by Kellton? There’s absolutely no mention of being part of Kellton on the website above.

(aravindms1us) #51 I think this is the one.Redirects to Kellton.

(Harpreet Singh) #52

this has been completely rebranded as Kellton last week or so !

(distilled_feni) #53

Just looking at kelltons growth in sales, profit and ROE in last 3 years, I simply don’t think it deserves a PE of 12. Specially for such a IT sector which has tremendous future potential.

Disc: invested

(Rajeev M. Parashar) #54

For what it’s worth, Michael Porter would look at Cambridge more favourably than Kellton. In my opinion, Kellton has its fingers in too many pies - SAP, ERP, IT Services & solutions, Web Design & Development, App Development, Mobility Solutions, Cloud, Analytics, Digital services. I’ve my doubts about the depth of their expertise in Cloud and Analytics. One can only hope that they have got their hiring right.

Disclosure: Invested in Kellton.

(Harpreet Singh) #55

Sirjee my good ol’ Porter may like Cambridge ( for the reasons you know better ) but the market will not like it compared to Kellton

Dont let such temporary blips dishearten you for they might be some sheer operator plays for many reasons …just look at the growth nos …cambridge is virtually standstill !

Kellton is in a hurry to get into leadership position in SMAC space and the best route is acquire “right fits” at right price with right manpower running it …which i think they are doing well !

(vibs6615) #56

@sumi00 Can you tell me the date on which BM tweeted about stock losing 30%

(Harpreet Singh) #57

any feedback from the agm from those who attended , thanks !!

(bala) #58

I have ‘attended’ the agm yesterday. It was at 11 AM, I reached the venue at 11:12 AM due to traffic, the meeting was already over by then !!! I could talk to CS and get some details , but I didn’t feel confident that the data being shared is accurate. I could understand they are still talking about 900 cr revenue in fy17, they are working on a big acquisition in US. Looks like they are having funding issues. CS told QIP is not on plan as lot of IPOs are sucking out liquidity. They are working with the banks to get loans.

mSahet is postponed, but looks like its cancelled. They are not able to explain the reason for only 10% ebidta margins when they are in ‘niche’ business, they kept on saying same thing we have hired some top level executives, the cost is accounted now but sales will come in later years.

Overall I got the feeling management is not willing to share details with minority share holders and the business itself has so many question marks.

Disc: I sold all the qty after the agm


Sorry, I missed this question. You can go to his TL and search. However, it seems he has deleted. I can not find it.

(vibs6615) #60

@sumi00 Yeah… asked you since I couldn’t find. But I couldn’t understand the context in your comment. What did he mean by that tweet?