CMP (NSE) 15:30, 17 Jun
Last updated on
30 Apr, 2020
Vast opportunities available across business lines
The organized flexi staffing industry benefits from increasing formalization of economy, compliance requirements and labour laws. Sans the impact of current event, markets for temporary staffing, outsourcing and facilities management in India are all projected to grow in double-digits over the medium term, driven by growing needs for flexible and efficient cost structures.
Ability to withstand near term pressures
Quess Corp is well placed to withstand near term pressure vis-à-vis small peers on account of its strong balance sheet. As at December 2020, its gross debt to Ebitda stood at 1.3x and its cash balance is sufficient to cover ~15 quarters of interest.
Outlook & Valuation
The recent correction offers an opportunity to invest in India’s leading staffing company at low valuations. The stock currently trades at ~7x FY21E EV/Ebitda, which is at a significant discount to TeamLease (trading ~26x). Hence, we recommend to BUY the stock from a longer term perspective with SOTP based target of Rs319.
|Consolidated Rs cr||FY18||FY19||FY20E||FY21E||FY22E|
|EPS growth (%)||127.5||(19.8)||(5.1)||(57.6)||81.7|
Source: Company, IIFL Research