Kellton Tech - multibagger in the making?

Kellton Tech Solutions consolidated net profit rises 240.87% in the June 2015 quarter

Sales rise 148.35% to Rs 103.76 crore

Net profit of Kellton Tech Solutions rose 240.87% to Rs 8.59 crore in the quarter ended June 2015 as against Rs 2.52 crore during the previous quarter ended June 2014. Sales rose 148.35% to Rs 103.76 crore in the quarter ended June 2015 as against Rs 41.78 crore during the previous quarter ended June 2014.
For the full year,net profit rose 246.47% to Rs 22.07 crore in the year ended June 2015 as against Rs 6.37 crore during the previous year ended June 2014. Sales rose 78.00% to Rs 237.90 crore in the year ended June 2015 as against Rs 133.65 crore during the previous year ended June 2014.

Particulars Quarter Ended Year Ended
Jun. 2015 Jun. 2014 % Var. Jun. 2015 Jun. 2014. % Var.
Sales. 103.76 41.78 148 237.90 133.65 78
OPM % 12.30 12.49 - 13.69 9.82. -
PBDT. 11.44 3.73. 207 28.44 9.95 186
NP. 8.59 2.52 241 22.07 6.37. 246

Strong results.... But stock has doubled in the last month And up 535% over 12 months.

Kellton Tech is confident of maintaining the company’s FY16 revenue growth guideline of Rs 600 crore. The company is aiming for Rs 2000 crore revenue growth in the next three years.

the company is looking at acquisitions to aid its growth. The acquisitions will be funded either via Qualified Institutional Placement (QIP) or by raising equity and the copmpany is planning to raise upto Rs 100-120 crore in the current year.

Main focus is on developing the Social, Mobile, Analytics, Cloud (SMAC) business, he said.

15-16 percent growth from the organic business in FY16 and profit after tax (PAT) of 10-11 percent next year is expected

Another multibagger in the making????

 

I happened to catch this interview on TV. two things struck me - the promotor was evasive with responses. Second, they seem to be relying significantly on acquisitions to deliver numbers. From where I see it, that immediately means projected numbers coming thru is a huge execution risk. One could look at m&a for incremental growth. They seem to be looking at it to power core growth. I would not buy .

 

Its 15-16% organic growth FY16. No subsequent period guidance

 

Ok. Then I stand corrected. I got the impression from the interview that a large chunk of growth would come from acquisitions. If that understanding is wrong then my thesis is wrong.

 

Looks like Dangerous stock to me. Too much of Hoo-Haa.