Buy Quess Corp; target of Rs 1040: Motilal Oswal

Motilal Oswal's research report on Quess Corp

Strong YoY growth was driven uniformly across business segments, with growth ranging from 17-40% YoY. GTS was the only segment with contribution from an acquisition (Comtel). Excluding this, growth in the segment was in high-single-digits. While growth in overseas acquisitions within GTS is expected to be relatively low, its Indian IT staffing business is facing the impact of sluggish activity in IT Services. Integration of Manipal and Terrier is expected to boost revenue growth in 2H.

Outlook

Valuations are rich, given its strong growth history and continued aggressive thrust on acquisitions. Over FY17-20E, we expect revenue/EBITDA/PAT CAGR of 27/37/58%, led by our assumption of 20% growth in organic business and incremental contribution by recent acquisitions. Long-term prospects stand bright, given high-growth opportunities, aggression shown on expansion and flawless execution.