Quess Corp Ltd Public Issue with just 10% of the IPO proceeds reserved for Retail Individual Investors is open for subscription. Here are the Research Analysts recommendations on the IPO.
Angel Broking Analysts Amarjeet S Maurya and Milna Desai are of the following View,
On the valuation front, at the upper end of the price band, the pre-issue P/E works out to 40.6x its FY2016 earnings which is lower compared to its peers (Team Lease is trading at 63.1x FY2016 earnings) and also has a better margin and ROE profile. Further, post the IPO, QCL is expected to improve its operating margin significantly. Considering the above mentioned positives and the company’s relatively lower valuation, we recommend a SUBSCRIBE on the issue.
Destimoney Research has the following Recommendation on the IPO of Quess Corp
Although on a average Quess Corp’s business segments are expected to grow in high teen organically, the high valuation, demanded in the IPO issue, factors in further inorganic expansion. Quess Corp has a better margin and ROE profile as compared to its listed peer, but the valuation at 11.6x FY16 book value for a company generating 26% ROE, factors in sustained high topline and earnings growth going forward as well. Quess has clocked ~50% CAGR in its book value in FY11-FY16 period, while the goodwill has grown at 52% CAGR. Owing to its history of growing via acquisitions, we remain wary of the sustainability of such growth going ahead. Hence, we recommend investors to AVOID the IPO.
GEPL Capital has the following recommendation,
Quess Corp ltd. is available at the IPO price band of Rs310 to Rs317 which is available at 45 P/E multiple. We believe that this valuation looks cheaper as compared to peers. So we recommend Subscribe to this IPO.
Hem Securities Analyst Astha Jain has the following View,
At price band of Rs 310-317 per share ,the p/e multiple will turn out to be 44-45 on post issue FY16 eps of Rs 7.03 of company. Co looks reasonably priced when compare to its peer Teamlease (p/e of 61).Therefore on valuation parameter , co looks attractive to deploy the funds in. Hence, we are recommending "Subscribe" on issue.
Sushil Finance Krishna Rana & Manan Divan has the following Review,
When compared with Peers such as TeamLease which is at 55, a P/E of ~45 of QUESS CORP looks attractive. Company asking price of 317 seems reasonably priced, considering the strong balance sheet and the diversified customer base. In this case we are betting on the Management of Quess Corp, particularly Ajit Isaac, who has created a very strong moat around its business. We believe the barriers to entry are high in this business and hence it will command premium valuations.
Ajcon Global analyst Akash Jain has the following recommendation,
At the upper end of the price band of Rs. 317, the IPO is valued at 45x at FY16 Post issue P/E which is at a premium owing to robust growth track record. With due consideration to factors like a) track record of successful inorganic growth with improved financial performance, b) improved operating efficiencies and margins through business cycles, c) robust recruitment capability; d) lean balance sheet with favorable Debt/Equity, strong ROEs, f) debtors Cycle at 45 days, we recommend investors to SUBSCRIBE the issue.
SPA Securities Analyst Deepak Tewary has the Following View,
We believe that there is significant growth potential for Quess considering its diversified presence in all sectors, strong presence in under penetrated Indian staffing market, increasing working population in India and track record of successful inorganic growth. Quess is available at a multiple of 45.2x based on FY16 earnings, which is at discount to its peer Teamlease (57.5x). Quess also has higher PAT margin, RoCE (24%) and RoE (30%) than Teamlease. If Quess manages to turnaround its major loss making companies in next two years (highly probable considering its track record), PAT is likely to grow at CAGR of 42.1% translating PEG ratio of 1.1x. We recommend investors looking for high risk high return, to SUBSCRIBE to the issue.
Monarch Networh Capital Analyst Jason Soans has the following recommendation,
The only listed peer in the space, TeamLease trades at 57.4 x FY16 earnings while the Quess Corp would trade at 45.1 x FY16 earnings at the upper price band of Rs 317. We believe Quess Corp has a superior business model owing to high margin IT business coupled with operational efficiencies in turn resulting in 25%+ ROE and ROCE. With an ever increasing formal work force in India and growth in flexi-staffing penetration we are positive on the growth prospects of Quess Corp and hence recommened a “SUBSCRIBE” to the IPO.
BP Equities Wealth Management has the following recommendation,
At the upper end of the price band Rs 317, QCL is available at 41x to its FY16 earnings, which is at a discount rate compared to its closest peer Team Lease which is trading at 63.1x to its FY2016 earnings. The company offers a robust growth story along with a better margin and ROE profile at reasonable valuation. Thus, we give a SUBSCRIBE’ rating to this issue.
