Why Kellton Tech Share Price is Rising

The information technology (IT) sector has been on a tear in 2024, outperforming the broader Nifty index for the second consecutive year.

So far this year, the Nifty IT index has jumped by around 6%, compared to a more modest 1.6% gain for the benchmark.

The IT index has demonstrated consistent growth, registering an increase of over 3% in February alone, marking the fourth consecutive month of gains.

Before this, it achieved a 3.2% rise in January 2024, a significant 9% gain in December 2023, and a 6.5% increase in November 2023.

Riding this wave, Kellton Tech Solutions, an IT stock, surged by 10% in a single day, reaching a 52-week high.

Here's what driving the rally.

Resilient Q3 Growth

Kellton Tech Solutions experienced a notable 10% surge today, reaching an intraday high of Rs 121.8, following a series of positive developments.

The catalyst for this upward movement was the company's earnings call announcement, wherein it unveiled a significant achievement. It secured an 8-year contract with LIC.

This ground-breaking contract involves the creation of infrastructure to accommodate around 150,000 individuals, highlighting the industry's confidence in Kellton Tech Solutions, evident from its previous successful collaborations with FCI and the Karnataka state government.

In addition to the LIC contract, Kellton Tech Solutions reported securing 11 new contracts and customers in the current quarter, demonstrating resilience in the face of challenges.

The company's ventures in Singapore yielded fruitful results, securing two new customers, and the launch of a design studio with Kellton further underscored its recognition of design capabilities.

The positive momentum initiated after these announcements on 19 February 2024, continued to fuel the stock's rise.

On 26 February 2024, high-frequency traders engaged actively with Kellton Tech Solutions, leveraging complex algorithms and powerful computers.

These trading firms, often referred to as algo firms on steroids, aim to capture spreads between spot and futures prices and have recently shown increased activity in small, illiquid stocks.

This heightened trading activity resulted in a substantial surge in volumes, with a total of 10 million shares traded.

Notably, trading firms such as HRTI Private Limited (0.5%), Citadel Securities (0.7%), and QE Securities (0.3%) were drawn into the heightened activity, further substantiating the reasons behind the stock's remarkable rally.

What Next?

Going forward, the company plans to reach a projected US$ 200 million (m) in business for FY25, whereas it was US$ 300 million a while back. In its annual report, the guidance indicated that US$ 200 m is the expectation for years 2024 and 2025.

Further, the surge in global IT spending is acting as a significant catalyst, driving the demand for Indian IT services and contributing to the overall growth of the sector.

As companies in various industries expedite their digital transformation initiatives, with a strong reliance on IT solutions, this trend is anticipated to be a key driver for the continued growth of IT stocks.

How Shares of Kellton Tech have Performed Recently

The Kellton Tech stock rose around 134% in the past one year. Over a month, the share price has gained by 17%.

Kellton Tech share price touched its 52-week high price of Rs 121.8 on 27 February 2024. Its 52-week low was Rs 41.9 touched on 31 March 2023.

The company is currently trading at a PB (price to book value) multiple of 6.7 times.

About Kellton Tech

Kellton Tech Solutions is engaged in the provision of information technology (IT) services.

The company operates through three segments which include digital transformation, enterprise solutions, and consulting.

It generates maximum revenue from the digital transformation segment.

The company serves construction; energy and utilities; healthcare; manufacturing; real estate; chemicals; distribution; food and beverage; oil and gas and other industries.

It provides services such as Digital Commerce and Marketing; Digital Integration; Technology Consulting and others.

For more details, see the Kellton Tech company fact sheet and quarterly results.

You can also compare Kellton Tech with its peers:

Kellton Tech vs Mindteck India

Kellton Tech vs 3I Infotech

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