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Motilal Oswal Report
Quess Corp Ltd.’s Q1 FY21 results were largely in line with estimates. Adjusted for businesses that remained completely closed (e.g., Excellus Learning Solutions Pvt.) and one-off Covid-19 related costs, underlying revenue, Ebitda, and recovery trends were reasonably resilient.
Good cost rationalisation, net debt reduction (by Rs 1 billion), healthy cash conversion (operating cash flow/Indian accounting standards adjusted Ebitda equals to 152%), and the simplification of Terrier Security Service’s holding structure are key micro-level positives.
Recent unemployment data (e.g., Centre for Monitoring Indian Economy) and hiring outlook surveys hint at quick and strong recovery in the job market.
However, the back and forth on lockdowns across cities would mean some amount of uncertainty in the job market.
Based on our learning in the immediate aftermath of global financial crisis and demonetisation, this uncertainty would likely lead to the conversion of some otherwise permanent roles into temporary ones, consequently benefitting staffing firms.
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