QUESS CORP

Market price on the date of suggestion – 270Rs

Quess Corp Limited is India’s leading business services provider and largest private-sector employer  with over 3.84 lakh people on its rolls, who are deployed across e-commerce, facility management, healthcare, retail, IT services and other industry sectors.The company offers a host of services to help organizations manage their non-core activities in the areas of Workforce Management, Operating Asset Management, and Global Technology Solutions across industries and geographies.

The team of over 3,84,000+ professionals spread across India, North America, South America, Southeast Asia, and the Middle East offers solutions across areas such as general staffing, IT staffing and recruitment, facility management, security services, BPO, CLM, business intelligence, robotic process automation, and more. Expert solutions provided by the company are aimed at improving the operational efficacies for over 2600+ clients across the globe.

Established in 2007 and headquartered in Bengaluru, Quess Corp has a revenue of approximately INR 11,000 crores as on March 31, 2020. The company is also ‘A Great Place to Work’ certified – a testament to its excellent culture, people, and processes.

Timeline-:

Services Offered:

Work Force Management
Quess corp helps its clients finding the right candidate for the job through various solutions offered by it which include contract and general staffing services, IT recruitment , managed services, executive search , skill development and RPO services.

Operating Asset Management
Quess corp helps its clients manage their assets very efficiently and reliably. The range of services provided by the company include integrated facility management services , telecom network optimisation , industrial asset management, corporate catering services and security services.

Global Technology Solutions
Quess corp provide technical excellence to support their clients with a robust and efficient technological ecosystem. Its services include BPO,  CLM, cloud implementation, break fix support, AMC services, robotic process automation, and digital transformation services.

Global Operations-:

Quess Corp is an integrated services provider which dares to reimagine business in the digital age. 

After its immense success in India, and gaining market share with its quality services, Quess Corp expanded its business to the Asia Pacific region in 2014. Quess Corp has operations in Singapore, Malaysia, Philippines, Cebu, Vietnam, and Sri Lanka, and having disrupted the market by enabling clients with state-of-the-art solutions with managing the entire People System from Resource Hiring to Exit Management. 

Quess corp has an extensive partner network in Thailand, Indonesia, Hong Kong, China, Burma, Japan, and Bangladesh. 

In its middle east geography, company has over 10,000 contract employees and it serves over 100 clients in more than 9 sectors. 

Quess Corp’s strong diversified portfolio in the areas of Workforce Management, Operating Asset Management and Global Technology Solutions facilitate functioning in cross-level and cross-functional roles. 

Quess Corp operates in 10 countries with more than 3000 employees in North America, the Middle East, and Southeast Asia regions and assisting clients from Telecom, BFSI, Retail, FMCG, Manufacturing, Technology, and Outsourcing industries.

Quess is known through its brand, MFX, in the United States of America. MFX is the P&C insurance industry’s digital transformation partner that helps in the adoption of digital and cloud technologies to keep OPEX down, cash-flows predictable, and customer experience more meaningful. Through the integration of disparate data streams, Quess Corp provide intelligence on claims patterns and help create new products that map to the changing business climate. In addition to insurance, Quess Corp has a host of solutions such as robotics solutions for BPO, mobility solutions for anytime anywhere transactions, and application integration services. Today, Quess Corp is one of the largest providers of integrated services through Paas, IaaS, ADM, BPO, Analytics, and GRC.

Quess Corp’s presence in Canada is solidified through Brainhunter Systems. Brainhunter has earned a reputation as a market leader in providing technology-based business solutions and services to clients. The company effectively manages specialised knowledge in a broad range of business applications and computing environments. The company has leveraged globally positioned workforce of software engineers and Subject Matter Experts to service clients that seek their proven delivery methodology. The company complement’s its vast array of human and technological resources with strategic partner relationships, including proven solution providers and market leaders.

Financials Highlights-: 

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• Strong Headcount growth, up 21% YoY to cross 384k.
• P&L statement: 
  • Strong Revenue growth, up 30% YoY from ₹ 2,295cr to ₹ 2,995cr 
  • EBIDTA increased 28% YoY from ₹ 132cr to ₹ 169cr 
  • Operating PAT reduced 5% YoY to ₹ 72cr, due to reduction in other income by ₹ 20cr.
• Balance Sheet:
  • Strong collection focus with Total DSO improving to 57 days, from 63 days in Q4FY19 
  • Goodwill impairment of ₹ 506cr of certain CGU’s – IFM, AllSec, Vedang, Trimax & MFXchange 
  • Impairment of intangibles of ₹ 134cr of IFM, AllSec and Vedang. 
  • Reversal of Deferred tax liability of ₹ 105cr on the impairment of goodwill/intangibles 
  • Move to the new tax regime – one time write off of MAT credit and deferred tax is ₹ 140cr

Q4FY20 Financial Performance-:

Revenue:

• Up 30% year on year basis.

Profitability:

• Operating PAT down 5% YoY due to reduction in other income of ₹ 20cr, and down 9% QoQ mainly on account of COVID impact.
• Q4 PAT includes one off exceptional items on account of Goodwill/intangibles impairment and change in tax regime

FY20 Financial Performance-:

Profitability:

• EBITDA Up 42% YoY
• Operating PAT is up 11% YoY to ₹ 284cr
• PAT includes one off exceptional items on account of Goodwill/intangibles impairment and change in tax regime.

Major Concern-:

• Gross Debt increased by ₹ ~363cr to ₹ 1,147cr primarily due to ₹ ~410cr acquisitions done during the year and a ₹ 100 cr increased precautionary working capital line drawn down in March 2020 due to COVID.

Conclusion-:

With the COVID-19 hitting companies hard, companies would not be very reluctant to increase their operating costs by hiring new employees. Infact in an urge to cut cost companies would be downsizing by decreasing the total head-counts and thereby relying more on companies such as Quess Corp by outsourcing non core activites to drive the costs further downwards which if happens can be a big beneficiary for the Quess corp. Overall the stock has fallen significantly from almost 1200 Rs with sales and profit growing consistently at Compounded Annual Growth rate of 35% which makes this stock worth exploring.

Note-: Users are requested to take their own decision regarding investing in this stock. Please do not send us any queries in event this stock does not perform. The above information is to take as educational purpose and does not constitute any recommendation to buy or sell.

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