A day ahead of the start of bidding for its forthcoming IPO, Quess Corp has roped in anchor investors and positive recommendation from most brokerage houses. In a statement to stock exchanges, the Bangalore-based HR and staffing specialist said it placed 5,678,234 shares with 15 anchor investors to raise a total of INR1.8 billion. The shares are placed at the upper end of the IPO price band of INR310-317 per share. The company, promoted by Ajit Isaac and Thomas Cook, aims to raise at least INR4 billion (INR400 crore) from the IPO. Here is the company’s official statement filed with exchanges.
Quess Corp has also received positive recommendations from most brokerage houses for its IPO. Most broker reports highlighted the company’s presence in high-growth business areas and high operating and net profit margins than the competition.
In its recommendation, analysts at Angel Broking said, “Going forward we expect the company to report healthy growth on back of increase in industry penetration. Further, the company’s profitability is also expected to increase due to its focus on increasing the share of higher-margin businesses in the revenue mix.” The analysts placed a SUBSCRIBE rating on the IPO.
Similar sentiments were echoed by Asit C Mehta whose IPO note advised investors to SUBSCRIBE to the IPO. “Compared with its nearest peer Team lease trading at 62X (as on 24th June 2016), QCL is available at a discounted price with better EBIDTA margin and better ROE as compare to closest peer Team lease . We believe improvement in cash flow would result in re-rating of the stock. Further, international presence helps QCL de-risk its revenue performance. Hence, we recommend to SUSBCRIBE the issue,” said the analyst note.
Hem Securities also put SUBSCRIBE recommendation on Quess Corp IPO noting the company’s attractive valuations. “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,” said its research note.
Analysts at Arihant Capital Markets sounded a cautionary note and gave a 3-star rating, noting that some of its subsidiaries are making losses and revenues and profits vary across its business segments. “Some of the subsidiaries are making loss like BrainHunter (incurred losses of Rs9.92 Crore) and MFX (incurred losses of Rs38 Crore and negative net worth of Rs57 Crore.),” said the brokerage house’s IPO recommendation.
Analysts at Ajcon Global have also advised investors to SUBSCRIBE to the issue. “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,” said its note on Quess Corp IPO.