MOSL: QUESS CORP (Buy)-Accelerating growth trends-Led by organic pick-up and continued inorganic thrust
Quess Corp: Accelerating growth trends; Led by organic pick-up and continued inorganic thrust
(QUESS IN, Mkt Cap USD2.4b, CMP INR1102, TP INR1300, 18% Upside, Buy)
- Strong revenue momentum: QUESS’ 48.5% YoY revenue growth to INR15.8b was a beat to our estimate, driven by a pick-up in organic growth and integration of TBSS (which we had assumed for the subsequent quarter). While there have been several acquisitions over the last few quarters, we reckon organic growth in the quarter would be ~25% v/s ~20% in the previous quarter. A pick-up was also seen in the People & Services business, with growth of 25% YoY v/s 8% YoY in the year-ago period.
- Margins stable despite accretive acquisitions: EBITDA margin at 5.7% expanded by 10bp YoY. While margins were stable in P&S and the integration of higher-margin Manipal Integrated Services boosted profitability in Integrated Facilities Management, there was a YoY decline seen in Global Technology Solutions (-50bp) and Industrials (-200bp). A turnaround in Industrials and further integration of accretive acquisitions would, however, lead to expansion, going forward. PAT at INR690m was up 105% YoY, beating estimates because of a lower ETR (80JJAA).
- Leadership changes and an acquisition: QUESS announced elevation of Subrata Nag to the role of CEO and appointed Manoj Jain as CFO. Ajit Isaac will continue leading the company as Chairman and MD. It also announced the acquisition of Greenpiece, a landscaping company, to fit into its IFM business. The acquisition would be EBITDA-accretive and would add to ~1% to the FY18 revenue base.
Quess Corp Limited is engaged in the business of temporary staffing services, executive search, recruitment services, housekeeping and facility management services, including engineering services, food services and skill development. The Company's segments include People & Services (P&S), Global Technology Services (GTS), Integrated Facilities Management (IFM) and Industrial Asset Management (IAM). Its P&S segment provides specialized service offerings in search, recruitment and recruitment process outsourcing, general staffing, training and skill development, payroll and compliance and retail solutions. Its GTS segment focuses on three areas, including information technology (IT) staff augmentation, solution and products. Its IFM segment offers facility management services, including soft services, hard services, food and hospitality and pest control. Its IAM segment provides plant asset management and it offers solutions in industrial operations and maintenance and managed services.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.