Motilal Oswal is bullish on Quess Corp has recommended buy rating on the stock with a target price of Rs 1300 in its research report dated January 24, 2018.
Motilal Oswal's research report on Quess Corp
QUESS’ 48.5% YoY revenue growth to INR 15.8 b was a beat to our estimate, driven by a pick -up in organic growth and integration of TBSS (which we had assumed for the subsequent quarter). While there have been several acquisitions over the last few quarters, we reckon organic growth in the quarter would be ~25% v/s ~20% in the previous quarter. A pick -up was also seen in the People & Services business , with growth of 25% YoY v/s 8% YoY in the year -ago period.
OutlookWe value Quess using DCF to reach a price target of INR1,300, implying 18 % upside . Our price target has increased by ~ 11 %, le d by higher -than -expected tax benefits. Valuations are rich given its strong growth history, and continued aggressive thrust on acquisitions. Ove r FY1 8/20E, we expect revenue/EBITDA/PAT CAGR of 2 6/37/ 39 %, led by our assumption of 20% growth in the organic business and increment al contribution by the recent acquisitions. The long- term prospects of the company stand bright, given the high -growth opportunities, aggression shown on expansion, and flawless execution. Maintain Buy.
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