Quess Corp (Quess) registered sequential improvement in the performance with revenues and operating profit growing by 7% and 8% on a q-o-q basis; General staffing headcounts grew by 5% on q-o-q basis to 3.33 lakh. OCF-to-EBIDTA stood at 80% in Q3FY21 vs. 51% in Q3FY20. Gross Debt reduced by Rs103crore on QoQ (Interest cost is down by 42% yoy and 24%QoQ). The management has maintained its target of achieving 20% RoE through double digit organic revenue growth, improvement in profitability through better mix and efficiencies and growing PAT by reducing in interest cost (coupled with sustained improvement in cash flows).
OutlookFY2021 marred by Covid-19, but with economy opening up the recruitment activities will improve which will drive Quess’ FY22 performance. We recommend Buy with a price target of Rs. 715.
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