MOSL: QUESS CORP (Buy)-Acquires assets from Monster and HCL-One employment-related and one new service line
Quess Corp: Acquires assets from Monster and HCL; One employment-related and one new service line
(QUESS IN, Mkt Cap USD2.3b, CMP INR1022, TP INR1300, 27% Upside, Buy)
- QUESS announced two acquisitions: (1) Monster's India, South East Asia and Middle East business, and (2) 'Care Business' of HCL Services from HCL Infosystems.
- As seen in the past, valuations for both these transactions are significantly lower than those commanded by QUESS. For Monster, that can be explained by stagnant revenue and absence of profitability, and for the Care Business by low profitability.
- Although our revenue estimates for FY19/20 have moved higher by 2.8%, a low margin profile and cash outflow offset that, leaving our numbers unchanged.
Transaction #1 – Monster.com
- Monster is an online portal that provides job search services to registered users and recruitment solutions to clients. It has a workforce of 600 across the three geographies. Monster Worldwide is owned by Randstad.
- The three entities together had revenue of USD26m in CY16, and have not seen growth since CY14. Combined profitability, we reckon, would be slightly in the red.
- The entities would be acquired for an Enterprise Value of up to USD14m (0.5x trailing revenue) and the transaction is expected to be completed by 4QFY18.
- The acquisition would complement QUESS’ presence in HR services and pose opportunities for value addition to its existing customers.
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.
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