Neutral Quess Corp; target of Rs 600: Motilal Oswal

Motilal Oswal's research report on Quess Corp

We attended the Quess Corp (QUESS) investor meet. This was organized to provide more details about the plan to unlock value for investors by splitting the company into three independent and standalone entities – Remain Co (Quess Corp, including the Workforce Management segment), Resulting Co 1 (Digitide, including BPM and Customer Experience) and Resulting Co 2 (Bluspring, including FMS, Industrial Services and Investments). The management also formulated its targets for the three divisions, including improving return on equity (RoE), expanding international presence, and achieving market leadership in all segments. While we await more detailed data on the respective balance sheets, we see clear benefits for QUESS from this focused approach, which should help each division concentrate on its strengths and attract a suitable investor profile. We continue to monitor the progress of the demerger process (to be completed in 12-15 months), and reiterate our Neutral rating on the stock due to the near-term industry headwinds. Following are the key takeaways from the investor meet.

Outlook

We reiterate our Neutral rating on the stock due to its full valuations, taxation concerns, and weak macro. Our TP of INR600 implies 13x FY26E P/E.

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