Buy Quess Corp; target of Rs 1100: Motilal Oswal

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26 Aug, 2025 12:21

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On 22nd Dec’21, Quess Corp. announced a fund infusion in its Monster.com subsidiary from Meridian Investments and Volrado Venture Partners at a pre-money valuation of INR6.0b, much higher than its 2018 acquisition cost of c.INR896m. The funding will be channelized to expand Monster’s presence in the job search and training market. Fund raise is positive but poses higher risk: In 2QFY22, Monster.com contributed 1.2% of Quess' revenues and nothing to PAT given its breakeven status. Hence, post-money valuation of INR6.6b (after first stage) is positive as it accounts for 5% of Quess' current market INR 118b. Conversely, we view Monster's expansion within job search and training space as concerning due to the dominating presence of Naukri in this market. Given the gap in capability and branding, Monster needs to deploy this fund quickly, and might require future funding to disrupt Naukri's monopoly. Thus, we see this as a key execution risk. We are currently not factoring this in our valuation for Quess.

We welcome the corrective steps taken by the new management to address some of the investor concerns. The improvement in cash conversion / RoE should drive a re-rating. Our TP implies 23x FY23E EPS. Maintain Buy.

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