Quess Corp IPO review – Worth investing

Quess Corp IPO:-

Quess Corp is a integrated business services provider firm whose IPO is coming in recently after stellar IPO of Teamlease. Quess Corp Limited is a leading integrated business services provider in India in diversified business segments, industries and geographies. They focus mainly for handling end to end business of their clients. Quess Corp Limited coming with a initial public offer which will hit the primary market on 29^th June 2016-1^st July 2016 to raise Rs.400 crore through fresh issue of around 1.29 lakh equity shares. The price range of this IPO will be of Rs.310 to Rs.317 per share.

About the company:-

Quess Corp Limited was incorporated on 2007 at Bengaluru, Karnataka. Quess Corp was previously known as Ikya Human Capital Solutions and is among the leading integrated business services providers and one of the largest general staffing companies in India. They work in different sectors of industries like recruitment, temporary staffing, technology staffing, IT products etc. They are IT staff augmentation provider in India. They are also among the leading industrial asset management service providers and integrated facility management service providers in India. The firm provide services like ecommerce, technology, banking and financial services, insurance, real estate, infrastructure facility management, power, energy, oil and gas, chemicals, metals, automotive, engineering, etc.

The firm has PAN India presence and execute its operations in 47 offices across 26 cities in India. Even they serve some of their services in North America, the Middle East and South East Asia. Currently they have more than 1,20,000 employees who are employed with company including 3,400 core employees and over 1,17,000 associated with the clients.

Their service and product offerings include four broad operational segments:

• Global Technology Solutions (“GTS”) :- The GTS segment provides IT staffing, IT product solutions and services in India, North America and South East Asia, under their Magna Infotech, Brainhunter, Mindwire and MFX brands.

• People and Services (“P&S”) :- The P&S segment provides comprehensive staffing (excluding IT staffing) services and solutions including general staffing, recruitment and executive search, recruitment process outsourcing, as well as payroll, compliance and background verification services under our IKYA and CoAchieve brands.

• Integrated Facility Management (“IFM”) :- The IFM segment provides integrated facility management solutions to corporates and other organizations such as hospitals and schools across India

• Industrial Asset Management (“IAM”) :- The IAM segment provides industrial operations and maintenance (“O&M”) services and related asset record maintenance services under our Hofincons brand across various industries, including power, energy, oil and gas, chemicals and ferrous and non-ferrous metal 147 industries across India and the Middle East

Business Strategies:-

• Expand service portfolio and operations globally through strategic acquisitions.
• Continue to improve operating margins
• Capitalize on the rapid growth of e-commerce in India and pursue other B2C opportunities
• Focus on domain depth and operational excellence

Object of the Issue:-

The objects of the Issue are:

1. Repayment of debt availed by our Company.
2. Funding capital expenditure requirements of our Company and our Subsidiary, MFX US.
3. Funding incremental working capital requirement of our Company.
4. Acquisitions and other strategic initiatives.
5. General corporate purposes.

Qualitative Factors:-

Some of the qualitative factors which form the basis for the Issue Price are:

1. Leading integrated business services provider in diversified business segments, industries and geographies;
2. Track record of successful inorganic growth with improved financial performance;
3. Robust recruitment capability, deep domain knowledge, knowledge of labour regulations and expansive operations;
4. Established relationship with clients leading to recurring business
5. Experienced management team and strong equity sponsorship.

Financials:-

In terms of revenue growth and earning, Quess Corp has registered excellent business growth in last four years. This shows correct by lokking at the financial figures of the firm. They grow in steady form but have success(profit) in each of the previous four year. They even manage to improve their margins too which are better than Teamlease.

As per ETimes, at the upper end of the price band, the pre-issue PE works out to 40.6 times its FY2016 earnings which are lower compared to its peers (Team Lease is trading at 63.1 times FY2016 earnings) and also has a better margin and ROE profile. Most brokerages such as Angel Broking, GEPL Capital and Monarch Networth Capital have recommended ‘subscribe’ ration on the IPO.

Disclaimer: We are not SEBI registered advisor and this article is not an investment advice. We are not authorized to give investment advice nor do we provide it on this website. In case you are interested in investing, we would advise you to contact your advisor for the same. We cannot be held liable for any loss arising due to investment made as per this article.

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