Motilal Oswal has given Buy recommendation for Quess Corp recommended buy rating on the stock with a target price of Rs 820 in its researc with a target price of Rs. 820 in its research report issued on Jun 05, 2021

Motilal Oswal’s research report on Quess Corp

Quess Corp (QUESS)’s 4QFY21 results were operationally in line with our expectations, as revenue recovered to 4Q FY20 levels. This was led by recovery in all segments – Workforce Management (-1% YoY), Operating Asset Management (+9% YoY), and Global Technology Solutions (+1% YoY). Quess took one-time provisioning of INR1.2b in 4Q (830m in Trimax + 360m in skill development) on account of delay in receivables in government business. Excl. this, EBITDA margin was in line at 5.2%. Adj. PAT – excluding provisions and a one-time deferred tax liability charge on goodwill of INR520m (due to tax law changes) – was INR1.1b (v/s our estimate of INR779m). The beat on PAT was primarily led by tax reversal in 4Q.

Outlook

Over the medium term, we expect QUESS to be a big beneficiary of the recent labor law reforms. Our TP of INR820 per share implies a multiple of 18x FY23E EPS. Reiterate Buy.