The agency has also assigned ‘[ICRA] A2+’ rating to the short-term facilities of the company.
ICRA stated that the assigned ratings factor in Kellton Tech Solutions Limited’s (KTSL) long track record in the information technology (IT) services industry and experienced promoters, which has enabled it to build a diversified client base across a wide range of industries.
It derives around 30-31% of its revenue from the IT services segment, followed by professional services and healthcare, which contributed 15-16% and 11-12% of revenue, respectively, in 9M FY2026.
Its customer concentration remains healthy, with the top five clients accounting for 16-17% of revenue in 9M FY2026. KTSL’s customer base includes marquee names such as Oil India, Life Insurance Corporation, entities of the TATA Group, and the Mahindra Group, among others.
The company has been adding new customers, while repeat business from existing clients has accounted for 83-86% of revenue over the past two years.
Aided by strong demand in the company’s key segments such as digital transformation programmes, AI-led intelligent automation, cloud-native engineering, and enterprise-solution implementations, its revenue grew at a healthy CAGR of 12.2% in the four years ended FY2025.
It is expected to record healthy double-digit revenue growth in the next two years on the back of a scale-up in revenue from recent acquisitions and sustained demand for AI-centric projects.
Operating margins remained range-bound at 10-12% over the past three years but are expected to improve with an increase in scale going forward.
The ratings also draw comfort from the company’s comfortable capital structure and coverage metrics, which are likely to improve further with growth in earnings.
The ratings, however, are constrained by the working capital-intensive nature of the company’s operations, owing to elongated receivable cycles. The company has sizeable unbilled revenue because of delays in receiving approvals from clients in both manpower-based billing and milestone-based billing contracts.
Moreover, it extends a credit period of up to 90-120 days, which is on the higher side for IT services clients. As a mid-sized IT services player, Kellton has limited bargaining power compared to larger peers, which constrains its ability to shorten receivable days.
The ratings also consider the high geographic concentration risk, as the US accounts for over 80% of the company’s revenue, exposing it to demand and regulatory risks in that geography.
Further, the company operates in a highly competitive global IT services environment characterised by pricing pressure, rapid technological changes, and competition from large IT players as well as niche digital firms. This intensifies margin pressures and necessitates continuous investments in talent and digital capabilities.
Kellton Tech Solutions offers digital transformation services, enterprise solutions, and consultancy services to customers across India, the USA, Europe, and APAC.
The scrip tumbled 4.99% to currently trade at Rs 13.51 on the BSE.