MOSL: QUESS CORP (Neutral)-Cash flow takes priority over margins
Quess Corp: Cash flow takes priority over margins
(QUESS IN, Mkt Cap USD1.4b, CMP INR660, TP INR750, 14% Upside, Neutral)
- 4QFY19 revenue grew 21.4% YoY (v/s est. +23%) to INR22.9b and EBITDA grew 20.5% YoY (v/s est. +18%) to INR1.3b. EBITDA margin expanded ~30bp QoQ to 5.7% (~20bp beat), despite an additional INR80-90m expenditure towards ad campaigns for Monster.com, implying an even better operating performance in the non-internet businesses. PAT declined 0.3% YoY to INR755m (v/s est. of 4% YoY decline).
- Organic growth in FY19 was driven by People and Services: In FY19, revenue/EBITDA/PBT was up 38.3%/31.1%/14.2% YoY, while PAT was down 17.2% YoY. Organic growth for the year was 24% YoY, led by People and Services, which grew 35% YoY. General Staffing headcount grew 22% YoY to 192k, while EBIT margin in the segment was 4.7%, flat YoY. Revenue growth of ~50% YoY in GTS (33% of revenues) was led mainly by integration of Conneqt and DigiCare acquisitions — adjusting for this – growth was 9.5%, in our view. EBIT margin here declined 60bp YoY to 5.9%. EBIT margin for the overall company declined 50bp YoY, of which, 30bp was contributed by Monster.com’s losses and 20bp from higher amortization charge on intangibles from acquired assets.
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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