Quess Corp IPO hit capital markets on Wednesday to raise Rs 400 crore through the public offer.
Quess Corp IPO hit capital markets on Wednesday to raise Rs 400 crore through the public offer. The company, promoted by Ajit Isaac and Thomas Cook (India), has fixed a price band of Rs 310–317 per share with a face value of Rs 10 each. The issue will close on July 1. The initial public offering (IPO) comprises fresh issue of shares aggregating Rs 400 crore. Quess Corp was earlier known as Ikya Human Capital Solutions Ltd.
Nirmal Bang Securities
Investment Rationale: Between FY12-16 Quess Corp’s revenues grew at CAGR of 52.39 per cent while EBIDTA grew at a CAGR of 57.1 per cent. Going forward, with turnaround from the current acquired business and with new acquisitions, Nirmal Bang expects the growth can continue. Moreover, the high growth in the industry coupled with shift from unorganised to organised player will also fuel and support growth for company. Quess Corp enjoyed the Ebitda margins in the range of 4 per cent to 5.1 per cent in the year FY12- FY16. The margin are likely to improve with turnaround of newly acquired business. At the given upper band price of issue of Rs 317, Quess Corp (QCL) is offered at PE of 45.1x its post issue diluted FY16 EPS of Rs 7.0 which is fairly priced to its peer. The brokerage house has ‘Subscribe’ rating to the issue.
Investment Rationale: At price band of Rs 310-317 per share, the P/E multiple will turn out to be 44-45 on post issue FY16 EPS of Rs 7.03 of company. Quess Corp IPO looks reasonably priced when compare to its peer Teamlease (p/e of 61). Therefore on valuation parameter , company looks attractive to deploy the funds in. Hence, HEM Securities recommending “Subscribe” on issue.
Asit C Mehta Investment Interrmediates
Investment Rationale: QCL is available at a discounted price with better EBIDTA margin and better ROE as compare to closest peer Team lease. We believe improvement in cash flow would result in re-rating of the stock. Further, international presence helps QCL de-risk its revenue performance. Hence, Asit C Mehta recommends ‘Subscribe’ to the issue.
Dalal & Broacha Stock Broking
Investment Rationale: As per consulting firm Frost and Sullivan general staffing, IT staffing and integrated facility management is expected to grow at 18-25 per cent over 2014-19, and Quess is a leading player in this segment. The only listed peer is Teamlease that trades at 57.5 times its consolidated FY16 EPS of Rs 15.92 while Quess Crop would trade at 45x FY16 earnings at upper price band of Rs 317. Quess Corp has a superior business model owing to high margin IT business along with operational efficiencies that resulted in over 25 per cent ROE and ROCE in FY16. The company has also managed its Debtors days in the range of 40-45 days. Quess is more diversified, de-risked and profitable than most of its competitors. Dalal & Broacha Stock Broking has ‘Subscribe’ rating on the issue.
Investment Rationale: Quess Corp has presence in high-growth business verticals like temporary general staffing, payroll and compliance outsourcing, professional IT staffing, facilities management, etc. under different brands. Angel Broking expects QCL to benefit from increasing demand for manpower across industries on the back of its strong management, healthy track record and presence in diversified business verticals which would help it to enhance its market share and increase revenue.