| Ksolves India Limited | ||
| Rating reaffirmed at 'CRISIL BBB/Stable' | ||
| Rating Action | ||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||
| 1 crore = 10 million | ||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL BBB/Stable’ corporate credit rating to Ksolves India Limited (KIL).
The rating factors in stable business and financial risk profiles of the company with continued growth of more than 57% during the two fiscals through 2024 driven by continuous focus on invocation and new technologies which help provide new solutions to clients and sustain revenue growth. The company has established presence across various geographies with around 64.8% revenue coming from North American market with services provided to various industries including information technology (IT), banking, financial services and insurance sector, telecommunication, education technology etc.
The rating continues to reflects the extensive experience of the promoters and management team in the internet software and services industry along with diversified revenue and customer profiles and healthy operating efficiency. These strengths are partially offset by modest scale of operations and vulnerability of the operating margin to fluctuations in foreign exchange (forex) rates. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of KIL along with its wholly owned subsidiaries -- Kartik Solutions Pvt Ltd (KSPL) and Ksolves LLC (KL).
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation |
Key Rating Drivers & Detailed Description Strengths: Extensive experience of the promoters and management team The key promoter cum managing director, Mr Ratan Kumar Srivastava, has around two decades of experience in the internet software and services industry; he is supported by a well-qualified and experienced management team. Expertise of the promoters, their strong understanding of market dynamics and healthy relationships with customers and suppliers should continue to support the business. There is a steady flow of repeat orders from clients in the US and European markets; around 82% revenue generated by the company is from repeat customers. Revenue increased at a compound annual growth rate of more than 57% for the three fiscals ended March 31, 2024, backed by repeat orders from customers and healthy order book visibility over the medium term. The company is focusing on emerging technologies such as artificial intelligence and machine learning, which are higher ticket size and better-margin products. Revenue is estimated at Rs 66.23 crore for the first half of fiscal 2025 is expected to be grow at a consistent pace for the full fiscal. KIL is expected to generate revenue of around Rs 135 crore in fiscal 2025.
Diversified revenue and customer profiles The company has presence in various sectors such as technology, media and entertainment, telecommunications, BFSI, electronic-commerce and healthcare. The top five customers accounted for ~32.7% of the revenue in fiscal 2024. Revenue profile is diversified, with the company booking revenue through licensing of software, annual maintenance fee and support services.
Healthy operating efficiency The operating margin stood healthy at 42-43%% for the three fiscals through 2024. Major expense of the company is employee cost which the company is able to maintain. The company focusses on emerging technologies like artificial intelligence and machine learning which are higher ticket size and better margin products. As the company is working on niche technologies for clients which is usually used by larger service providers, it has started spending on marketing and promotional initiatives such as setting up stalls in technology events, participating in exhibitions etc. to increase awareness among potential customers about its technological capabilities. Due to higher spending on marketing initiatives, the operating margin moderated to 37.98% till September 2024 in the ongoing fiscal. Increased spending on marketing is expected to expand operating scale and moderate operating margin to around 35-40% over the medium term.
Weaknesses: Modest scale of operations Intense competition constrains scalability, as reflected in revenue of Rs 108.64 crore in fiscal 2024. Revenue is estimated at Rs 66.23 crore the first half of fiscal 2025 and with healthy visibility and business in hand should reach Rs 135 crore for the full fiscal. Presence in a niche segment will continue to support revenue growth over the medium term, which will remain monitorable.
Vulnerability of operating margin to fluctuations in forex rates Since majority of the revenue comes from the international market, any sharp fluctuation in forex rates will significantly affect realisation and cash accrual. |
Liquidity: Adequate In the absence of any repayment obligation, the cash accrual -- projected at Rs 10-13 crore per annum will be sufficient to meet dividend payout and aid financial flexibility. Current ratio was healthy at 9.87 times on March 31, 2024. Cash and bank balance stood at Rs 15.43 crore as on September 30, 2024. Low gearing and moderate networth should also support liquidity. |
Outlook: Stable KIL along with its subsidiaries will continue to benefit from the extensive experience of the promoters and their established relationship with clients. |
Rating Sensitivity Factors Upward Factors
Downward Factors
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About the Company KIL, incorporated in July 2014, is listed on the National Stock Exchange and Bombay Stock Exchange. The company is engaged in developing software and application and providing IT-related solutions such as big data services, salesforce services, artificial intelligence, machine learning, iOS application development, android application development, node.js development, reactjs development, salesforce development, serverless architecture, ruby on rails development, cyber security, DevOps, SecOps, backup, and disaster recovery, cross-platform, SaaS application, and API integration to clients. |
About the Subsidiaries KSPL, incorporated in 2012, was acquired by KIL in 2019. It provides IT and IT-enabled services including web, mobile, cloud, and electronic-commerce solutions
KL was established in June 2021 in the United States of America. It is a wholly owned subsidiary of KIL and provides IT solutions with KIL.
The group is headed by Mr Ratan Kumar Srivastava (founder and managing director) along with other directors. |
Key Financial Indicators (Combined)
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Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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Annexure - List of Entities Consolidated
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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Criteria Details
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