At a Glance
Quess Corp, India’s staffing behemoth, reported Q1 FY26 net profit of ₹51 crore, a 7.6% rise but still nothing to throw confetti about. Revenue stood at ₹3,651 crore, barely moving, while operating margins remained an anemic 2%. The stock slipped to ₹294, close to its 52-week low. The company’s ongoing three-way demerger drama, tax penalties, and a qualified audit opinion are making investors more nervous than interns on day one.
Introduction
Quess Corp, the self-proclaimed productivity wizard, seems to have outsourced its profit growth to an alternate universe. The company dominates workforce management, serving over 3,000 clients and managing headcounts that rival small countries. Yet, shareholders are wondering if all this scale is just smoke and mirrors.
The recent quarters have been a parade of flat revenues, regulatory penalties, and accounting footnotes that read like thriller novels. Promoters cling to a 56.98% stake, but FIIs have been slowly ghosting. Add a low ROE of 10% and margins thinner than paper, and you’ve got a stock testing investor patience.
Business Model (WTF Do They Even Do?)
Quess Corp thrives (or tries to) on three main segments:
- Workforce Management (72% revenue) – General staffing, IT staffing, recruitment process outsourcing. Think manpower-on-demand for corporates who hate hiring headaches.
- Global Technology Solutions – IT services, digital platforms, and other tech outsourcing.
- Operating Asset Management – Facilities management, security, and utilities services.
In theory, it’s a diversified service machine. In practice, it’s a profit-margin starvation diet.
Financials Overview
Q1 FY26 Highlights:
- Revenue: ₹3,651 crore (flat YoY)
- Operating Profit: ₹70 crore (OPM 2%)
- PAT: ₹51 crore (↑7.6% YoY)
- EPS: ₹3.42
FY25 wasn’t any better: sales fell to ₹14,967 crore, PAT to ₹46 crore. The dividend payout was a whopping 325% – probably to pacify angry investors.
Commentary? Revenues large, margins microscopic. Classic Quess.
Valuation
Current P/E of 17x seems reasonable, but growth prospects are shaky.
Fair Value Calculations
- P/E Method:
- Industry P/E ~20x, EPS ₹6 → Fair Price = ₹120
- EV/EBITDA Method:
- EV/EBITDA ~10x, EBITDA ₹395 Cr → EV ≈ ₹3,950 Cr → Fair Price ≈ ₹130
- DCF (optimistic):
- Assuming 8% CAGR, WACC 9%, terminal growth 3% → Fair Price ≈ ₹140
💡 Fair Value Range: ₹120 – ₹140 (Current price ₹294 = fantasy pricing)
What’s Cooking – News, Triggers, Drama
- Three-way demerger approved by NCLT; expect chaos in shareholding.
- Tax penalties over ₹250 crore raising eyebrows (and audit qualifications).
- Origint – new business to tap $105B GCC market by 2030; sounds sexy, needs execution.
- Change of CFO and leadership reshuffle – because musical chairs solves everything, right?
Balance Sheet
| (₹ Cr) | Mar 2025 |
|---|---|
| Assets | 2,812 |
| Liabilities | 1,614 |
| Net Worth | 1,085 |
| Borrowings | 113 |
Auditor’s Roast: Debt is under control, but reserves collapsed post-demerger. Equity looks slimmer than a startup founder after funding winter.
Cash Flow – Sab Number Game Hai
| (₹ Cr) | 2023 | 2024 | 2025 |
|---|---|---|---|
| Ops | 466 | 529 | 380 |
| Investing | 4 | 50 | 2 |
| Financing | -443 | -496 | -318 |
Stand-up Take: Ops cash flow dipping, financing cash flow bleeding – Quess is like that friend who earns well but still borrows at month-end.
Ratios – Sexy or Stressy?
| Ratio | Value |
|---|---|
| ROE | 10.4% |
| ROCE | 9.8% |
| P/E | 17.3 |
| PAT Margin | 2% |
| D/E | 0.1 |
Verdict: Margins so thin, they could pass through a keyhole.
P&L Breakdown – Show Me the Money
| (₹ Cr) | 2023 | 2024 | 2025 |
|---|---|---|---|
| Revenue | 17,158 | 19,100 | 14,967 |
| EBITDA | 589 | 700 | 262 |
| PAT | 223 | 280 | 46 |
Auditor Joke: Revenue fluctuates like cryptocurrency, profit freefalls like a meme stock.
Peer Comparison
| Company | Revenue (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| NESCO | 732 | 390 | 22 |
| CMS Info Systems | 2,452 | 375 | 21 |
| Nirlon | 636 | 218 | 22 |
| Quess Corp | 16,506 | 91 | 17 |
Commentary: Peers print profits, Quess prints headcount.
Miscellaneous – Shareholding, Promoters
- Promoters: 56.98% (stable, but no confidence boost)
- FIIs: 14.58% (constant exit mode)
- DIIs: 8.74%
- Public: 19.7% (holding the bag)
Demerger into Digitide and Bluspring will shuffle everything further.
EduInvesting Verdict™
Quess Corp is a staffing giant with profitability issues. Its large-scale operations, new ventures, and demerger may unlock value in the future, but right now it’s a cocktail of low margins, regulatory headaches, and strategic confusion.
Past Performance:
- Strong growth until FY22, post which revenues fell and profits nosedived.
Current Scenario:
- Margins crawling, PAT barely recovering, and a P/E that assumes a turnaround.
- Demerger and tax disputes create uncertainty.
Future Outlook:
- If Origint clicks and demerger creates focused entities, value could emerge.
- Risks: regulatory fines, low-margin contracts, execution misses.
SWOT Analysis:
- Strength: Market leader in staffing, diverse offerings.
- Weakness: Thin margins, regulatory overhang.
- Opportunity: Demerger unlock, GCC market entry.
- Threat: Compliance penalties, competitive pricing pressure.
Final Word: Great scale, poor profits. Needs a miracle or an activist investor.
Written by EduInvesting Team | July 29, 2025
SEO Tags: Quess Corp, Workforce Management, Q1 FY26 Results, Demerger Analysis, Staffing Industry
