Quess Corp (QCL) is one of India's leading integrated business service providers with a clear focus on emerging as a preferred partner for handling end-to-end business functions of its clients. QCL allots 5,678,234 equity shares at Rs. 317 a share aggregating to Rs 10 billion (approx.) to 15 anchor investors.
The IPO will open for subscription on Wednesday, June 29, 2016 and will close on Friday, July 1, 2016. The price band for the issue has been fixed at Rs 310-317. Some of the major foreign and domestic Anchor Investors are Fidelity Investments, Kuwait Investment Authority, ICICI Prudential MF, HDFC MF, Nomura, Harvard Management Co, DSP BlackRock, Wasatch, Pictet, Grandeur Peak and others.
Brokerage firms ICICI Securities, Angel Broking, GEPL Capital and Choice Broking have recommended 'Subscribe' to IPO of Quess Corp.
Commenting on the investment rationale, Angel Broking, said, ''Over the last four years, the company has reported strong revenue CAGR of ~52% and PAT CAGR of ~94% which was largely fuelled by its strategic business acquisitions and by strong growth across business verticals. Going forward we expect the company to report healthy growth on back of increase in industry penetration. Further, the company's profitability is also expected to increase due to its focus on increasing the share of higher-margin businesses in the revenue mix. On the valuation front, at the upper end of the price band, the pre-issue P/E works out to 40.6x its FY2016 earnings which is lower compared to its peers (Team Lease is trading at 63.1x FY2016 earnings) and also has a better margin and ROE profile. Further, post the IPO, QCL is expected to improve its operating margin significantly. Considering the above mentioned positives and the company's relatively lower valuation, we recommend a 'SUBSCRIBE' on the issue.''
Meanwhile, GEPL Capital, said, ''The company have net profit margin of 2%. The margins will be wiped off if cost will increase. Its business and operations involved various risk like recent acquisitions, integration of acquired assets. Quess Corp ltd. is available at the IPO price band of Rs 310 to Rs 317 which is available at 45 P/E multiple. We believe that this valuation looks cheaper as compared to peers. So we recommend 'SUBSCRIBE' to this IPO.''
Choice Broking, said, ''Non core activities of other businesses are the core activity of QCL. The company has a leading integrated business model with revenue streams is diversified across the four segments. QCL's two segments: global technology solutions (IT staffing) and people & services (general staffing) accounts for around 84% of total revenue. The company is in high growth phase as the revenue grew by a CAGR of 52% and PAT by a CAGR of 81% over FY12-16. Though the EBIDTA margin at 4.5% and NPM at 2.6% is low, these margins are better than peer i.e. Teamlease Services. The debtor days declined to 46 by FY16 compared to 67 number in FY12 indicating improved operating efficiencies and strong relationship with clients. At the upper price band, QCL share is available at P/E (x) of 40.6 which is significant discount around 35% to its peer Teamlease Services. Thus, we assign 'SUBSCRIBE' rating to this issue.''
Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.
