Quess Corp IPO – Should You Invest?
The IPO season continues with a spate of recent launches like Mahanagar, Ujjivan, Equitas & Thyrocare; and there is yet another one – Quess Corp. If you have ever been on a job hunt, chances are that you would have shared your CV with a company called IKYA, erstwhile name of Quess Corp.
Quess Corp is one of India’s leading HR Solutions Company primarily handling recruitment and staffing for companies across various industries viz. IT, Retail, BFSI, Healthcare, etc. The strengths of the company have been enumerated below:
Investment Arguments
- India’s Demographic Dividend to Ensure Robust Growth –
Over the last 3 years, Quess Corp has recorded staggering compounded revenue and profit growth of 51% & 72% respectively. Owing to India’s large pool of young population, India’s labor force is estimated to increase by 32% over the next 20 years thereby fuelling growth of HR Solutions companies. Quess Corp is well poised to benefit from this demand by exploring both, organic and inorganic, growth opportunities.
- Foray in New Business Segments to be Margin Accretive –
In order to focus on core business processes, companies across the board outsource activities that are non-core to their business function. This trend has benefitted Quess Corp hitherto in the recruitment and staffing segments. In order to further exploit the increasing outsourcing trend, Quess Corp has ventured into 2 new business segments – Integrated Facility Management & Industrial Asset Management which enjoy higher EBITDA margin of 6% & 11% respectively vs. 3.5% margins in its traditional mainstay segment of staffing in non-tech companies. Quess Corp aspires to transition from purely a HR Solutions company to an integrated business services provider for its clients and aims to enter segments which offer higher margins than its traditional HR Solutions segment.
- Strong Promoter Pedigree –
Ajit Isaac, MD & CEO, Quess Corp & Thomas Cook India Ltd (TCIL), a listed company, are the promoters of the company. Fairfax Financial Holdings, via its stake in TCIL, is indirectly the promoter of Quess Corp. PremWatsa, polpularly knows as ‘Canadaian Warren Buffett’ is the Founder, Chairman & CEO of Fairfax Financial Holdings. PremWatsa is highly regarded for his business acumen and indentifying great investment opportunities. Having a distinguished investor like PremWatsa as the promoter of Quess Corp provides a strong backing to the company.
GreenEdge Wealth Services’ View
At the higher price band of Rs. 317, the company is valued at 45x FY16 earnings, which is comparable to the valuations of recently listed, TeamLease Services, the largest peer in the industry. Given the company’s organic & inorganic growth opportunities, superior return ratios and attractive valuations vs TeamLease, we recommend to subscribe to the issue.
Issue Details
| Issue Open Date | 29th June, 2016, Wed |
| Issue Close Date | 1st July, 2016, Fri |
| Issue Price (Rs.) | 310 to 317 |
| Market Lot | 45 |
| Minimum Application Size for Retail (Rs.) | 14,265/- |