Motilal Oswal has increased its target price on the shares of Quess Corp, after the company acquired Tata Business Support Services (TBSS) for Rs 153 crore on Monday. Quess Corp will own 51% of the Hyderabad-headquartered company, with Tata Sons holding the remaining stake. Motilal Oswal says that Tata Business Support Services will fit into Quess Corp’s solutions portfolio. Quess Corp Chairman and MD Ajit Isaac said yesterday, “We are excited about our partnership with the Tata Group. This investment marks a significant milestone for Quess in its journey to build a world class business services platform.” TBSS is among India’s premier customer experience management companies, with over 10 years of sectoral expertise, Quess Corp said in a statement.
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The Chairman had pointed out that customer lifecycle management and and BPO was missing in the suite of business services offered by the company. “The addition of Quess will further expand the company and let it continue to grow from strength to strength,” TBSS Chairman and Tata Capital MD Praveen Kadle said.
Motilal Oswal has raised the target price on the shares to Rs 1,170. Quess Corp shares were trading at Rs 924, up by more than 6.5% since yesterday’s close. Motilal Oswal’s target price implies an upside of more than 26% from the current market prices. The shares have returned more than 31% in the year so far.
The BSE Midcap index is up by more than 39% in the same period. Motilal Oswal believes that the valuation for the deal is attractive at 2.5 times sales and 46 times EBITDA. The research and brokerage firm has also increased FY19/20 estimates for revenue, EBITDA and net profit by 8-12% each.
“Customer Experience (CX) has been a key focus area for us and will continue to see further investments from our side. This acquisition is in line with our investment philosophy of backing great management teams and creating superior long-term value for our shareholders,” Ajit Isaac said.