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AI efficiency benefits may not accrue to margins
View Risks →Kellton Tech Solutions Limited — Q3 FY26
Kellton Tech reported Q3 FY26 revenue of ₹308 crore, up 2.7% QoQ, with EBITDA of ₹39.7 crore (12.9% margin) and PAT of ₹25.5 crore (8.3% margin).
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Kellton Tech reported Q3 FY26 revenue of ₹308 crore, up 2.7% QoQ, with EBITDA of ₹39.7 crore (12.9% margin) and PAT of ₹25.5 crore (8.3% margin). Growth was driven by AI-led legacy modernization and ServiceNow deals, including a 4-million-line code conversion project. Management highlighted 20-30% efficiency gains on outcome-based projects via AI tools, but noted most clients restrict AI use in T&M contracts, limiting margin expansion. Guidance remains vague; no specific revenue or margin targets were provided. A key risk is that AI efficiency benefits may be passed to clients rather than retained, capping margin upside. The SAS sell-off was dismissed as a market overreaction, with management confident in enterprise demand.
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Efficiency gains on outcome-based projects
20-30%
N/A
AI tools improve developer productivity by 20-30% on new projects.
Lines of code in legacy modernization project
4 million
N/A
A 4-million-line 4GL to .NET migration project enabled by AI.
Microsoft solution partner designations
3
N/A
Achieved highest partnership level in Data & AI, Digital & App Innovation, and Infrastructure.
New client wins in Q3
11
N/A
Won 11 new clients including a global tech giant and a US telecom provider.
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Management stated that most clients restrict AI use in T&M contracts and demand pricing concessions, limiting margin expansion from productivity ga...
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