Growth Strategy
Quess Corp Ltd is focusing on a multi-pronged growth strategy, including:
- Workforce Management Expansion: Increasing headcount in workforce management, with over 500,000 associates currently engaged. The company has added approximately 50,000 associates in the past nine months.
- Verticalization Approach: Implementing a sector-specific hiring strategy, focusing on BFSI, consumer retail, telecom, manufacturing, and IT staffing.
- GCC-as-a-Service: Leveraging Global Capability Centers (GCC) to provide workspace and workforce solutions.
- Technology Integration: Expanding investments in digital solutions and automation to improve efficiency and profitability across staffing, IT services, and managed services.
- Demerger Strategy: Moving forward with a three-way demerger plan to unlock value for shareholders and improve focus in specific business areas.
Future Outlook
- Revenue Growth: Expecting a double-digit revenue increase despite macroeconomic challenges.
- Profitability Improvements: Targeting EBITDA margin expansion by reducing cost inefficiencies and focusing on high-margin businesses like GCC, IT staffing, and digital services.
- Sectoral Performance:
- IT staffing expected to rebound in Q4 with increased demand from GCCs.
- Overseas staffing in the Middle East and APAC regions is expected to contribute more, while Singapore remains sluggish due to visa restrictions.
- The operating asset management (OAM) platform will benefit from its latest acquisition in the food and catering sector.
- Product-led business (foundit) is projected to regain momentum post-management transition.
Challenges
- Macroeconomic Headwinds: High inflation, reduced private consumption, and cautious corporate spending could slow growth in key business areas.
- Regulatory Impact: RBI tightening lending norms for BFSI and the evolving regulatory landscape in employment laws could impact the staffing industry.
- Margin Pressures: Wage inflation, festive season bonus payouts, and costs associated with the demerger have led to lower EBITDA margins.
- Overseas Market Constraints: Visa regulations in Singapore continue to hinder overseas staffing expansion.
Key Advancements
- Debt Reduction: The company has repaid ₹150 crores of debt, bringing total gross debt down to ₹224 crores.
- Dividend Payout: Declared an interim dividend of ₹4 per share.
- Tech Investments: Increased adoption of automation in payroll management, InsurTech, and digital services, leading to improved efficiencies.
- Demerger Progress: Successfully obtained shareholder and creditor approvals, with NCLT approval expected in Q4 FY25, and the demerged entities likely to be listed by Q1 FY26.
Is Quess Corp a Good Buy?
- Strengths: Strong revenue growth (11% YoY), improving PAT (59% YoY growth), and a well-diversified business model.
- Risks: Short-term margin pressures, dependence on economic recovery, and regulatory uncertainties.
- Valuation & Potential: With its focus on digital transformation, sectoral diversification, and aggressive expansion in workforce management, Quess Corp remains a strong long-term play. Investors should consider it as a potential buy for long-term value creation, particularly post-demerger when each business unit can optimize its strategies independently.