29 July 2020
1QFY21 Results Update | Sector: Others
Quess Corp
Estimate change
TP change
Rating change
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Research, Sales and Trading team. We
request your ballot.
CMP: INR344
TP: INR480 (+40%)
Buy
Likely to benefit from near-term uncertainty in job market
Company-level improvements continue!
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Financials & Valuations (INR b)
Y/E Mar
2020 2021E
Sales
109.9 106.2
EBIT Margin (%)
Adj. PAT
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
Ratios
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
EV/Sales (x)
3.7
2.6
18.3
4.3
200.8
10.4
15.4
0.0
18.8
1.7
7.8
0.5
3.4
1.6
11.4
-37.5
215.1
6.9
8.9
0.0
30.1
1.6
8.7
0.5
QUESS IN
147
50.7 / 0.7
639 / 165
-20/-37/-21
116
2022E
133.0
4.0
3.5
24.8
117.1
246.4
13.5
13.7
0.0
13.9
1.4
6.5
0.4
Quess Corp (QUESS)’s 1QFY21 results were largely in line with estimates.
Adjusted for businesses that remained completely closed (e.g., Excellus) and
one-off COVID-19-related costs, underlying revenue, EBITDA, and recovery
trends were reasonably resilient. Good cost rationalization, net debt
reduction (by INR1b), healthy cash conversion (OCF/Ind-AS adjusted EBITDA
= 152%), and the simplification of Terrier’s holding structure are key micro-
level positives.
Recent unemployment data (e.g., CMIE) and hiring outlook surveys hint at
quick and strong recovery in the job market. However, the back and forth on
lockdowns across cities would mean some amount of uncertainty in the job
market. Based on our learning in the immediate aftermath of GFC and the
demonetization, this uncertainty would likely lead to the conversion of some
otherwise permanent roles into temporary ones, consequently benefitting
staffing firms.
Operationally, our earnings estimate over FY21–22E remains largely
unchanged. However, we increase our FY21E ETR to 23% (from 13%), with
no bearing on cash tax outflow. Over the medium term, we expect QUESS to
be the biggest beneficiary of the recently announced labor law reforms
(refer to our earlier
note).
Reiterate
Buy.
Quess Corp reported revenue/EBIT/PAT growth of 1%/-23%/-62% YoY (v/s
est. of 0%/-35%/-63% YoY).
Sequentially, overall headcount declined ~13% and general staffing
headcount ~15%, in line with our expectations.
Revenue decline (~20% QoQ) was in line with estimates. Sequentially,
revenue decline was led by General Staffing (22%), BPO (25%), and Facilities
Management (21%).
Notably, despite the sharp decline in General Staffing revenue, the company
did not lose any major customer in this segment.
Closure of IT offices during the quarter led to a strong impact on the Facility
Management and Security Services businesses.
Reported EBITDA was ~8% ahead of our estimates. Sequentially, a sharp
drop in the revenue run-rate led to a proportionate impact on EBITDA (even
as EBITDA margins remained largely stable).
From Mar’20 levels, indirect costs were stated to have declined by ~20%.
The EBITDA decline in General Staffing (~21% QoQ) was more or less in line
with revenue decline.
Businesses such as training and development (Excelus) and break-and-fix
(Digi Care) remained an overhang on reported EBITDA for the quarter.
Despite the bench costs incurred in some parts of the business, sequential
EBITDA margin expansion in Tech Services and Operating Asset Management
was a key surprise.
In-line results; debt reduction / healthy cash generation key positives
Shareholding pattern (%)
As On
Promoter
DII
FII
Others
Jun-20 Mar-20 Jun-19
55.3
54.9
71.4
15.7
16.6
6.2
14.0
14.6
14.0
15.0
13.9
8.4
FII Includes depository receipts
Sudheer Guntupalli – Research analyst
(Sudheer.Guntupalli@MotilalOswal.com); +91 22 5036 2749
Research analyst: Mohit Sharma
(Mohit.Sharma@MotilalOswal.com) /
Heenal Gada
(Heenal.Gada@MotilalOswal.com)
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Motilal Oswal Financial Services
Quess Corp
Net debt reduction by INR1b to INR2.5b and gross debt reduction by INR1.7b to
INR9.8b were a key positive.
Cash conversion (OCF/Ind-AS adjusted EBITDA) was healthy at ~152%,
supported by prompt collections, release of working capital, and refunds.
Reported PAT included a one-off exceptional item of INR250m. This relates to
fair value gains on the Terrier consolidation. Adjusted for this, PAT for the
quarter (INR221m) was in line with our estimates.
As Terrier Security becomes a subsidiary (hitherto associate), the total implied
purchase consideration stands at INR1.5b. Provisionally, almost the entire
amount was recognized as goodwill on consolidation.
Management indicated guidance for reaching 20% ROE by 2023 remains
unchanged. In addition, the company expects 20% YoY growth in cash flows.
It continues to focus on cross-selling its services. Customers using two or more
services across the portfolio now contribute 68% to sales.
Even as the situation remains uncertain, the company believes the worst related
to COVID-19 was behind by 1QFY21. July has witnessed a 2x increase in the
number of open positions (v/s June). Open positions in July are at 60% of pre-
COVID-19 levels. Management expects recovery to be driven by the impending
festive season.
While margins are expected to remain under pressure in the near term, the
company expects an improvement over the medium term.
Headcount reduction in General Staffing was largely driven by headcount
rightsizing in the Retail and BFSI verticals.
Even as the headcount in IT Staffing declined (~7% QoQ), a new high-margin
business (Digital Skills) partly offset this impact.
Excellus witnessed sharp revenue and EBITDA impact due to the closure of
training facilities. Even as the government assured the coverage of fixed costs,
the company had already recognized costs. Management expects cost reversals
as and when reimbursements come in from the government.
Closure of educational campuses and IT offices impacted Facility Management
and Terrier Security Services.
The HRO segment within Allsec Technologies has been a rare bright spot.
Slowdown in hiring activity led to a significant drop in search activity and the
revenue of Monster during the quarter.
Management does not expect any bad debt or receivables issue in the share of
working capital-funded clients.
The stock is still ~42% lower than pre-COVID-19 levels on concerns of severe
impact on: (a) General Staffing and collections/receivables, (b) liquidity position,
and (c) potential legal liabilities in outcome-based businesses in the event of
massive employee lay-offs.
However, we understand these concerns were exaggerated as the business /
cash collections (both markup- and outcome-based) did not witness any major
dislocation over Mar–Jun’20. In fact, it was impressive to note very healthy cash
conversion in 1QFY21 (OCF/Ind-AS adj. EBITDA = 152%).
Key highlights from management commentary
Valuation and view – Company-level improvement to drive re-rating
29 July 2020
2
 Motilal Oswal Financial Services
Quess Corp
As the economy unlocks gradually and enterprises look to dodge supply
disruption, we believe the company/sector has already passed the peak of
uncertainty. Encouraging rebound in the unemployment situation (as reflected
in CMIE data) and the hiring outlook (as reflected in the TeamLease survey)
corroborate our view.
Given some level of uncertainty in the economy (due to the back and forth on
lockdowns), some of the otherwise permanent roles are also likely to be fulfilled
through flexi-staffing as employers attempt to keep their costs variable. We
noticed similar trends in the immediate aftermath of GFC and the
demonetization, when staffing companies benefitted due to positive hiring
trends in some verticals. Such a trend should likely play out in the near term,
benefitting business services firms such as QUESS.
Over the medium term, as both the central and state governments look forward
to liberalizing and formalizing the labor markets, QUESS should be among the
biggest direct beneficiaries.
We expect 10%/24% revenue/EPS CAGR over FY20–22E. Using the Residual
Income approach, we arrive at TP of INR480. We adjust the FY20 book value for
an appropriate share of outstanding goodwill/inter-company loans on the
balance sheet. Welcome corrective steps undertaken by the new management
to address some investor concerns and improve cash conversion/ROE should
drive a re-rating. Our TP implies 19x FY22E EPS, still a steep 40% discount to
TeamLease.
(INR m)
Var. (% /
bp)
0.1
10
-0.3
8.4
41.3
-2.0
19.1
47
-12.1
-12.0
63.2
Consolidated - Quarterly
Y/E March
Net Sales
YoY Change (%)
Total Expenditure
EBITDA
Margins (%)
Depreciation
EBIT
Margins (%)
Interest
Other Income
PBT before EO expense
Recurring Tax
Rate (%)
Adjusted PAT
Extraordinary items
Reported PAT
YoY Change (%)
Margins (%)
1Q
23,966
21.8
22,474
1,492
6.2
579
913
3.8
396
169
685
106
15.4
579
0
579
6.5
2.4
FY20
FY21E
FY20
FY21E
Est.
2Q
3Q
4Q
1Q
2QE
3QE
4QE
1Q
26,503 29,500 29,946 24,094 26,038 27,490 28,529 1,09,915 1,06,151 24,070
26.7
35.8
30.5
0.5
-1.8
-6.8
-4.7
28.9
-3.4
0.4
24,889 27,706 28,260 22,797 24,580 25,895 26,874 1,03,329 1,00,147 22,873
1,614 1,794 1,686 1,297 1,458 1,594 1,655
6,586
6,004 1,196
6.1
6.1
5.6
5.4
5.6
5.8
5.8
6.0
5.7
5.0
652
658
596
594
599
605
628
2,486
2,425
606
962 1,136 1,089
703
859
990 1,027
4,100
3,579
590
3.6
3.9
3.6
2.9
3.3
3.6
3.6
3.7
3.4
2.5
461
423
387
379
390
395
395
1,668
1,559
431
159
97
86
76
95
91
89
511
351
86
660
810
788
399
564
686
721
2,943
2,370
245
-29
51
69
178
130
158
166
196
631
29
-4.5
6.3
8.7
44.6
23.0
23.0
23.0
6.6
26.6
12.0
690
759
720
221
434
528
555
2,747
1,739
215
0
0 7,019
-250
0
0
0
7,019
-250
0
690
759 -6,299
365
434
528
555
-4,271
1,989
215
11.9
16.7 -934.3
-37.1
-37.0
-30.4 -108.8
-266.5
-146.6 -62.8
2.6
2.6
-21.0
1.5
1.7
1.9
1.9
-3.9
1.9
0.9
2.7
69.3
2,576
62
29 July 2020
3
 Motilal Oswal Financial Services
Quess Corp
Key Perfor. Indicators
Y/E March
Headcount (k)
Segment Revenue (INR m)
Workforce Management
Operating Asset Management
Tech Services
EBITDA Margin (%)
Workforce Management
Operating Asset Management
Tech Services
6.0
7.5
9.6
5.5
6.7
11.5
5.3
7.4
12.1
5.1
6.6
10.9
3.7
7.1
13.0
5.4
7.1
11.1
14,880
4,270
4,800
16,690
4,320
5,510
19,590
4,480
5,440
20,390
4,280
5,280
16,180
3,680
4,230
71,550
17,350
21,030
1Q
357
FY20
2Q
377
3Q
385
4Q
384
1Q
334
FY21
2Q
3Q
4Q
384
FY20
FY21
Key highlights from management commentary
Management indicated guidance for reaching 20% ROE by 2023 remains
unchanged. In addition, the company expects 20% YoY growth in cash flows.
It continues to focus on cross-selling its services. Customers using two or more
services across the portfolio now contribute 68% to sales.
Even as the situation remains uncertain, the company believes the worst related
to COVID-19 was behind by 1QFY21. July has witnessed a 2x increase in the
number of open positions (v/s June). Open positions in July are at 60% of pre-
COVID-19 levels. Management expects recovery to be driven by the impending
festive season.
While margins are expected to remain under pressure in the near term, the
company expects an improvement over the medium term.
Headcount reduction in General Staffing was largely driven by headcount
rightsizing in the Retail and BFSI verticals.
Even as the headcount in IT Staffing declined (~7% QoQ), a new high-margin
business (Digital Skills) partly offset this impact.
Excellus witnessed sharp revenue and EBITDA impact due to the closure of
training facilities. Even as the government assured the coverage of fixed costs,
the company had already recognized costs. Management expects cost reversals
as and when reimbursements come in from the government.
Closure of educational campuses and IT offices impacted Facility Management
and Terrier Security Services.
The HRO segment within Allsec Technologies has been a rare bright spot.
Slowdown in hiring activity led to a significant drop in search activity and the
revenue of Monster during the quarter.
Management does not expect any bad debt or receivables issue in the share of
working capital-funded clients.
In-line results; debt reduction/healthy cash generation key positives
Quess Corp reported revenue/EBIT/PAT growth of 1%/-23%/-62% YoY (v/s est.
of 0%/-35%/-63% YoY).
Sequentially, overall headcount declined ~13% and general staffing headcount
~15%, in line with our expectations.
29 July 2020
4
 Motilal Oswal Financial Services
Quess Corp
Revenue decline (~20% QoQ) was in line with estimates. Sequentially, revenue
decline was led by General Staffing (22%), BPO (25%), and Facilities
Management (21%).
Notably, despite the sharp decline in General Staffing revenue, the company did
not lose any major customer in this segment.
Closure of IT offices during the quarter led to a strong impact on the Facility
Management and Security Services businesses.
Reported EBITDA was ~8% ahead of our estimates. Sequentially, a sharp drop in
the revenue run-rate led to a proportionate impact on EBITDA (even as EBITDA
margins remained largely stable).
From Mar’20 levels, indirect costs were stated to have declined by ~20%.
The EBITDA decline in General Staffing (~21% QoQ) was more or less in line with
revenue decline.
Businesses such as training and development (Excelus) and break-and-fix (Digi
Care) remained an overhang on reported EBITDA for the quarter.
Despite the bench costs incurred in some parts of the business, sequential
EBITDA margin expansion in Tech Services and Operating Asset Management
was a key surprise.
Net debt reduction by INR1b to INR2.5b and gross debt reduction by INR1.7b to
INR9.8b were a key positive.
Cash conversion (OCF/Ind-AS adjusted EBITDA) was healthy at ~152%,
supported by prompt collections, release of working capital, and refunds.
Reported PAT included a one-off exceptional item of INR250m. This relates to
fair value gains on the Terrier consolidation. Adjusted for this, PAT for the
quarter (INR221m) was in line with our estimates.
As Terrier Security becomes a subsidiary (hitherto associate), the total implied
purchase consideration stands at INR1.5b. Provisionally, almost the entire
amount was recognized as goodwill on consolidation.
Valuation and view – Company-level improvement to drive re-rating
The stock is still ~42% lower than pre-COVID-19 levels on concerns of severe
impact on: (a) General Staffing and collections/receivables, (b) liquidity position,
and (c) potential legal liabilities in outcome-based businesses in the event of
massive employee lay-offs.
However, we understand these concerns were exaggerated as the business /
cash collections (both markup- and outcome-based) did not witness any major
dislocation over Mar–Jun’20. In fact, it was impressive to note very healthy cash
conversion in 1QFY21 (OCF/Ind-AS adj. EBITDA = 152%).
As the economy unlocks gradually and enterprises look to dodge supply
disruption, we believe the company/sector has already passed the peak of
uncertainty. Encouraging rebound in the unemployment situation (as reflected
in CMIE data) and the hiring outlook (as reflected in the TeamLease survey)
corroborate our view.
Given some level of uncertainty in the economy (due to the back and forth on
lockdowns), some of the otherwise permanent roles are also likely to be fulfilled
through flexi-staffing as employers attempt to keep their costs variable. We
noticed similar trends in the immediate aftermath of GFC and the
demonetization, when staffing companies benefitted due to positive hiring
5
29 July 2020
 Motilal Oswal Financial Services
Quess Corp
trends in some verticals. Such a trend should likely play out in the near term,
benefitting business services firms such as QUESS.
Over the medium term, as both the central and state governments look forward
to liberalizing and formalizing the labor markets, QUESS should be among the
biggest direct beneficiaries.
We expect 10%/24% revenue/EPS CAGR over FY20–22E. Using the Residual
Income approach, we arrive at TP of INR480. We adjust the FY20 book value for
an appropriate share of outstanding goodwill/inter-company loans on the
balance sheet. Welcome corrective steps undertaken by the new management
to address some investor concerns and improve cash conversion/ROE should
drive a re-rating. Our TP implies 19x FY22E EPS, still a steep 40% discount to
TeamLease.
Exhibit 1: Revision to our estimates
Change in Estimates
Revenue (m)
Rev. growth (%)
EBITDA (m)
EBITDA Margin (%)
EBIT Margin (%)
EPS (INR)
FY21E
1,06,151
(3.4)
6,004
5.7
3.4
11.4
Revised
FY22E
1,33,036
25.3
7,982
6.0
4.0
24.8
FY21E
1,10,217
0.3
6,057
5.5
3.3
15.5
Earlier
FY22E
1,37,017
24.3
8,078
5.9
3.9
25.1
FY21E
-3.7%
-368bp
-0.9%
16bp
8bp
-26.2%
Change
FY22E
-2.9%
101bp
-1.2%
10bp
12bp
-1.2%
Source: Company, MOFSL
29 July 2020
6
 Motilal Oswal Financial Services
Quess Corp
Financial and valuation
Consolidated - Income Statement
Y/E March
Total Income from Operations
Change (%)
Cost of services
Employees Cost
Other Expenses
Total Expenditure
% of Sales
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income
PBT bef. EO Exp.
EO Items
PBT after EO Exp.
Total Tax
Tax Rate (%)
Minority Interest
Reported PAT
Adjusted PAT
Change (%)
Margin (%)
Consolidated - Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Minority Interest
Total Loans
Deferred Tax Liabilities
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Goodwill on Consolidation
Capital WIP
Total Investments
Curr. Assets, Loans&Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Other Current Liabilities
Provisions
Net Current Assets
Appl. of Funds
2015
25,671
155.2
717
22,684
965
24,366
94.9
1,305
5.1
101
1,203
218
57
1,042
0
1,042
370
35.5
0
672
672
276.3
2.6
2016
34,350
33.8
481
30,069
2,289
32,839
95.6
1,511
4.4
144
1,367
310
91
1,147
0
1,147
335
29.2
0
812
812
20.8
2.4
2017
43,149
25.6
714
36,339
3,718
40,771
94.5
2,378
5.5
275
2,103
471
154
1,787
0
1,787
534
29.9
-1
1,254
1,254
54.5
2.9
2018
61,673
42.9
1,422
50,793
5,914
58,129
94.3
3,544
5.7
747
2,796
755
569
2,611
0
2,611
-483
-18.5
-4
3,098
3,098
147.0
5.0
2019
85,270
38.3
2,624
67,132
10,868
80,624
94.6
4,646
5.4
1,232
3,414
1,144
712
2,983
0
2,983
329
11.0
88
2,565
2,565
-17.2
3.0
2020
1,09,915
28.9
3,382
86,535
13,420
1,03,337
94.0
6,578
6.0
2,486
4,092
1,668
511
2,935
6,641
-3,706
474
-12.8
138
-4,318
2,609
1.7
2.4
2021E
1,06,151
-3.4
3,267
83,571
13,309
1,00,147
94.3
6,004
5.7
2,425
3,579
1,559
351
2,370
-250
2,620
631
24.1
107
1,882
1,632
-37.5
1.5
(INR M)
2022E
1,33,036
25.3
4,094
1,04,738
16,222
1,25,054
94.0
7,982
6.0
2,687
5,295
1,589
366
4,072
0
4,072
529
13.0
0
3,543
3,543
117.1
2.7
(INR M)
2022E
1,475
26,451
27,926
876
9,758
-6,166
32,394
13,795
10,956
2,839
8,358
79
725
43,485
284
24,056
7,106
12,040
22,984
2,398
18,592
1,993
20,501
32,501
2015
258
2,267
2,525
0
2,170
-35
4,660
604
415
189
1,104
0
0
5,869
4
2,755
818
2,292
2,502
414
1,941
147
3,367
4,660
2016
1,133
2,433
3,566
0
3,783
-1,345
6,005
1,043
541
502
2,020
24
37
8,573
18
6,926
1,094
536
5,151
674
4,138
339
3,423
6,005
2017
1,268
11,780
13,048
9
7,440
-1,633
18,864
3,504
976
2,529
9,187
77
776
14,433
71
8,966
3,039
2,357
8,138
778
6,825
536
6,294
18,864
2018
1,455
23,153
24,608
16
9,662
-3,647
30,638
7,485
2,126
5,359
10,959
22
888
28,111
85
13,936
5,661
8,430
14,701
1,481
12,166
1,054
13,411
30,638
2019
1,461
25,795
27,256
31
7,502
-5,046
29,742
8,152
3,357
4,795
11,769
147
820
27,540
221
16,164
5,855
5,300
15,328
1,729
12,351
1,248
12,212
29,742
2020
1,475
21,284
22,759
769
9,976
-6,166
27,339
9,295
5,843
3,451
8,358
46
725
34,439
284
18,795
7,587
7,773
19,681
1,633
16,494
1,554
14,759
27,339
2021E
1,475
22,908
24,383
876
9,861
-6,166
28,955
11,295
8,269
3,026
8,358
59
725
36,183
284
19,485
6,543
9,871
19,288
1,582
16,115
1,591
16,895
29,062
29 July 2020
7
 Motilal Oswal Financial Services
Quess Corp
Financial and valuation
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
FCF per share
Return Ratios (%)
RoE
RoCE
RoIC
Working Capital Ratios
Asset Turnover (x)
Debtor (Days)
Creditor (Days)
Leverage Ratio (x)
Net Debt/Equity
Consolidated - Cash Flow Statement
Y/E March
OP/(Loss) before Tax
Depreciation
Interest & Finance Charges
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
CF from Operating incl EO
(Inc)/Dec in FA
Free Cash Flow
(Pur)/Sale of Investments
Others
CF from Investments
Issue of Shares
Inc/(Dec) in Debt
Interest Paid
Dividend Paid
Others
CF from Fin. Activity
Inc/Dec of Cash
Closing Balance
2015
5.9
6.8
22.3
0.0
0.0
58.1
50.5
15.4
1.6
31.0
0.0
-1.1
30.8
22.6
25.9
5.5
39
6
0.5
2016
7.0
8.3
31.5
0.0
0.0
48.9
41.6
10.9
1.2
28.1
0.0
-6.2
26.7
17.1
22.3
5.7
74
7
0.7
2017
10.1
12.3
115.1
0.0
0.0
34.0
27.9
3.0
1.1
19.8
0.0
2.4
15.1
11.4
14.9
2.3
76
7
0.3
2018
21.8
27.1
217.1
0.0
0.0
15.8
12.7
1.6
0.9
14.9
0.0
1.1
16.5
14.6
17.0
2.0
82
9
0.1
2019
17.5
25.9
240.5
0.0
0.0
19.6
13.3
1.4
0.6
11.2
0.0
7.2
9.9
10.6
12.9
2.9
69
7
0.0
2020
18.3
35.7
200.8
0.0
0.0
18.8
9.6
1.7
0.5
7.8
0.0
21.3
10.4
15.4
22.0
4.0
62
5
0.1
2021E
11.4
28.4
215.1
0.0
0.0
30.1
12.1
1.6
0.5
8.7
0.0
1.2
6.9
8.9
13.4
3.7
67
5
0.1
2022E
24.8
43.6
246.4
0.0
0.0
13.9
7.9
1.4
0.4
6.5
0.0
13.2
13.5
13.7
20.0
4.1
66
7
0.1
(INR M)
2022E
4,072
2,687
1,589
-529
-3,043
4,775
-366
4,409
-2,520
1,889
0
0
-2,520
0
-103
-1,589
0
366
-1,326
563
7,105
2015
1,049
101
218
-412
-942
15
9
24
-145
-120
-525
375
-295
0
1,015
-217
0
0
798
527
818
2016
1,147
144
310
-482
-1,622
-503
8
-495
-226
-721
0
129
-97
34
1,137
-304
0
0
867
275
1,093
2017
1,723
333
479
-839
-941
755
-71
684
-383
301
0
-5,434
-5,817
3,693
3,816
-443
0
13
7,079
1,946
3,039
2018
2,615
747
755
-744
-1,858
1,515
-428
1,087
-928
159
-1,808
-5,333
-8,069
8,485
1,785
-665
0
0
9,605
2,622
5,661
2019
2,566
3
1,144
-1,750
-1,248
714
1,302
2,016
-957
1,058
-117
2,898
1,823
0
-74
-865
0
-2,706
-3,645
194
5,855
2020
-4,320
2,486
1,668
-1,450
-1,860
-3,476
7,086
3,610
-570
3,040
570
-3,090
-3,090
480
2,200
-1,160
0
0
1,520
2,040
7,587
2021E
2,370
2,425
1,559
-631
-3,181
2,543
-351
2,192
-2,020
172
0
0
-2,020
107
-115
-1,559
0
351
-1,217
-1,045
6,542
29 July 2020
8
 Motilal Oswal Financial Services
Quess Corp
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial
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available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a
registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and
National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National
Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance
Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are
available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report
should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific
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website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated
from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability
or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong
Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers
Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any
brokerage and investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is
intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as
"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which
this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration
provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange
Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-
dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this
chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL
in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”,
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inform MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
29 July 2020
9
 Motilal Oswal Financial Services
Quess Corp
********************************************************************************************************************************
The associates of MOFSL may have:
- financial interest in the subject company
- actual/beneficial ownership of 1% or more securities in the subject company
- received compensation/other benefits from the subject company in the past 12 months
- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the
company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)
- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent
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nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or
distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for
informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing
in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.
The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this
document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this
document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views
expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade
securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of
the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and
should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make
modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from
time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of
information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or
may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,
directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or
entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in
all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost
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The person accessing this information specifically agrees to exempt MOFSL or any of its
affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such
misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person
accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;
Website
www.motilaloswal.com.CIN
no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth
Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is
a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.
Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.
Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no
assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance
Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
29 July 2020
10