Quess Corp Delivers Strong Organic Growth Despite Economic Headwinds; Operating Cash flow increases by 60% YoY to Rs. 52Cr
Bengaluru, India – 24th July 2019: Quess Corp, India’s leading business services provider announced its financial results for the first quarter (Q1 FY20) ended 30th June 2019 today. The Company has adopted Ind AS 116 standards with effect from 1st April 2019. The key consolidated financial parameters are:
| Particulars | Q1 FY20 | Q1 FY19 | YoY(%) | Q4 FY19 | QoQ(%) | ||||||
| Revenue | 2,395 | 1,968 | 22% | 2,295 | 4% | ||||||
| EBITDA | 147 | 102 | 44% | 132 | 12% | ||||||
| EBITDA Margin | 6.15% | 5.21% | 95 bps | 5.74% | 41 bps | ||||||
| PBT | 67 | 64 | 5% | 88 | -24% | ||||||
| PAT | 56 | 54 | 3% | 76 | -25% | ||||||
| PAT Margin | 2.35% | 2.76% | -41 bps | 3.29% | -94 bps | ||||||
| Diluted EPS
(in ₹) |
3.7 | 3.7 | -2% | 5.2 | -29% |
Financial Highlights – Adjusted for the Impact of Ind AS 116
| Particulars | Q1 FY20 | Q1 FY19 | |||||||||
| Results with Ind AS 116 | Adjustment due to
Ind AS 116 |
Operating Results | Q1 FY19 | YoY (%) | |||||||
| EBITDA | 147 | -27 | 120 | 102 | 17% | ||||||
| Dep. & Amortisation | 58 | -25 | 33 | 30 | 12% | ||||||
| Finance costs | 40 | -7 | 33 | 26 | 25% | ||||||
| Other Income | 17 | 17 | 16 | 8% | |||||||
| Sh. of profit of Associates | 0.2 | 0.2 | 1.6 | -85% | |||||||
| PBT | 67 | 4 | 71 | 64 | 12% | ||||||
| Tax | 11 | 0.6 | 11 | 9 | 20% | ||||||
| PAT | 56 | 4 | 60 | 54 | 11% | ||||||
| Diluted EPS
(in ₹) |
3.7 | 0.3 | 3.9 | 3.7 | 5% | ||||||
Analysis of changes in operating parameters (without the Ind AS 116 adjustments):
- Our Revenues grew 22% YoY on the back of an increase in employee headcount of 85,000 between June 2018 to June 2019 and anorganic growth of 21% in Q1 FY20.
- Our Quarterly EBITDA grew by 17% YoY to Rs. 120Cr resulting in an EBITDA Margin of 5.02% in Q1 FY20.
- PAT of Rs. 60Cr during the quarter was higher by Rs. 4.4Cr than the Reported PAT due to the impact of Ind AS 116.
- Diluted Earnings per Share (EPS) stood at Rs. 3.9 for Q1 FY20 compared to Rs. 3.7 in Q1 FY19.
- Significantly, our Cash flow from Operations (OCF) stood at Rs. 52Cr for Q1 FY20 as against Rs. 33Cr in Q1 FY19, an increase of 60%YoY basis.
- OCF/EBITDA conversion improved to 44% during the quarter compared to 32% in Q1FY19.
Business Update:
- Sales Wins: The Company has added a total of 106 clients in Q1 FY20 across platforms aggregating to a TCV of over Rs. 2500Cr.
- Strong Growth in Staffing: Quess’ General Staffing business registered the highest ever quarterly headcount addition of 32,000 in Q1 FY20 as against a full year addition of 35,000 in FY19.
- Leading BPM Platform: Conneqt’s acquisition of Allsec has resulted in creating one of the largest domestic BPM platforms with Allsec becoming our vehicle for Human Resource operations (HRO) and International Customer Lifecycle Management (CLM) business. Conneqt reported a robust Revenue and EBITDA growth of 21% and 74% YoY respectively. Similarly, Allsec reported a strong quarter withRevenues of Rs. 67.4Cr and EBITDA of Rs. 18.8Cr resulting in a margin of 27.9% in Q1 FY20.
- Partnership between Amazon & DigiCare: Amazon’s investment in Quess would be utilized to build Digicare into a large brand-agnostic after-sales service provider with a PAN India service network and superior technical capabilities across product categories.
- Strong Pipeline in Excelus: Our Training & Skill Development arm, Excelus, has received fresh targets to train students under Pradhan Mantri Kaushal Vikas Yojana (PMKVY) for 31,000 students aggregating to a contract value of Rs. 31Cr, which the Company shall execute in the next 2-3 quarters.
- Corporate Restructuring:
- EGM for approving the shareholding restructuring has been scheduled for 20th Aug, 2019
- The merger of four wholly owned subsidiaries – Master Staffing Solutions, Coachieve, Aravon, CenterQ shall be completed by Q3 FY20 to rationalize the number of group entities.
Capital Allocation:
- The Company’s focus remains consolidation while driving synergies across our platforms and is not planning any acquisitions in the near future. However, the Company would continue to pursue selective strategic partnerships with leading global players/investors to scale up some of its growth businesses.
- Quess signed a Share Subscription Agreement with Amazon to issue 7.54 lakh shares, at a price of Rs. 676 per share amounting to an investment of Rs. 51Cr by way of a preferential allotment. Quess and Qdigi Service Limited (DigiCare), a wholly owned subsidiary of the Company, executed an investment agreement with Amazon to utilize the investments towards the business of DigiCare.
- Conneqt, a subsidiary of the Company completed the acquisition of Allsec Technologies through purchase of an initial tranche of 61.35% from the Promoters and Carlyle. This was followed by an open offer in which Conneqt purchased an additional 12.03% shareholding taking the total ownership to 73.38%. The total consideration towards the acquisition stood at Rs. 330Cr.
- Update on QEBFC:
- Quess has started discussions with the stakeholders to monetize this investment in the short term.
- The Quarterly loss from QEBFC has been substantially reduced to Rs. 3.8Cr in Q1 FY20 from Rs. 11.8Cr in Q4 FY19.
- QEBFC has already sign
