Summary of earnings call for Quess Corp Ltd published on 01 Aug, 2025

Quess Corp Limited
Q1 FY26
Call date · July 29, 2025

1 · Management Commentary

Key Positives

• Q1 FY26 revenue at INR3,651 crores (+2% YoY), EBITDA at INR70 crores (+10% YoY), and PAT at INR51 crores.
• EBITDA margin improved by 7 bps QoQ to 1.9%; adjusted PAT at INR53 crores (+8% YoY).
• Professional Staffing delivered its best-ever quarter: revenue INR244 crores (+31% YoY), EBITDA INR25 crores (+48% YoY), margin at 10.2%.
• Net headcount addition of ~2,000 associates; June saw a strong uptick with 6,500 net adds.
• Recognized as India’s #1 staffing company for 2025 by Staffing Industry Analysts; certified Great Place to Work for the sixth consecutive year.
• Zero gross debt as of June 30, 2025, demonstrating strong liquidity.

Key Negatives

• General Staffing revenue flat YoY and down 1% QoQ due to muted headcount growth and challenging environment.
• Overseas business revenue flat YoY and down 1% QoQ; Singapore continues to face visa-related headwinds.
• Core-to-associate ratio declined to 307, reflecting increased recruiter hiring ahead of seasonal demand.

Forward Guidance

• Capex: No major capex; Origint and digital initiatives are asset-light, cost-plus models.
• New products/segments: Launch of Origint (GCC as a Service); Hamara Jobs platform integrated with ONDC.
• Expected client wins/losses: 79 new contracts in General Staffing (9,000+ associates), 12 new logos in Professional Staffing (10 from GCC).
• Revenue/margin outlook: Focus on margin expansion, especially in Professional Staffing (double-digit EBITDA margin expected to sustain); General Staffing to benefit from seasonal uptick and open mandates (42,000).
• Other strategic initiatives: Accelerating digital platforms, expanding GCC opportunity, leveraging AI-driven delivery, and targeting MSME segment via ONDC.

2 · Q&A Highlights

Q 1 (Professional Staffing Sustainability): Is the recent growth and margin expansion in Professional Staffing sustainable?
A (Management):
• Growth is expected to sustain due to focus on niche/super-niche GCC roles, AI-driven delivery, and a healthy pipeline (1,200 open mandates, 73% GCC exposure).
• Double-digit EBITDA margin expected to continue.

Q 2 (General Staffing Recovery & Core-to-Associate Ratio): What is the outlook for General Staffing growth and the implications of the declining core-to-associate ratio?
A (Management):
• June saw strong recovery; 42,000 open mandates and seasonal demand expected to drive growth in Q2.
• Lower ratio is due to ramp-up in recruiting capacity ahead of festive season; expected to normalize as net additions rise.

Q 3 (Margin Outlook in General Staffing): What are the drivers for margin improvement in General Staffing?
A (Management):
• Margin expansion to be driven by improved business mix (more BFSI, manufacturing), operational efficiency, and higher service fees; IDC for the season already baked in.

Q 4 (ONDC & Digital Initiatives): How will Hamara Jobs’ integration with ONDC differentiate Quess and impact sourcing?
A (Management):
• Integration opens access to MSME and rural markets, expanding job seeker and recruiter base beyond current enterprise focus.

Q 5 (Origint/GCC as a Service): How does Origint transform the GCC business and what is its margin/revenue potential?
A (Management):
• Origint offers end-to-end GCC setup and management; asset-light, cost-plus model.
• Expected to maintain double-digit EBITDA margins; significant opportunity as India adds 700+ GCCs by 2030.

Q 6 (Construction Vertical): What is the status and outlook for the construction staffing business?
A (Management):
• Current headcount 2,500–3,000; growth muted in Q1 due to rains, but Q2/Q3 expected to see uptick.
• Gross margins 3–4x that of general staffing; still a small contributor but with upside potential.

Q 7 (Employment-Linked Incentive Scheme): What is the expected impact of the new ELI scheme?
A (Management):
• Should drive formalization and improve retention; cash flow benefits likely from Q4 FY26 onwards; too early to quantify margin impact.

Q 8 (Overseas Business & Singapore): What is the margin outlook for overseas staffing and why is Singapore underperforming?
A (Management):
• Overseas EBITDA margin at 5.9%; Middle East, Malaysia, and Philippines offset Singapore’s decline.
• Singapore faces ongoing visa headwinds; diversification and local general staffing expansion underway.

3 · Other Key Numbers

• Q1 FY26 revenue: INR3,651 crores
• EBITDA: INR70 crores
• EBITDA margin: 1.9%
• PAT: INR51 crores (adjusted PAT: INR53 crores)
• Adjusted EPS: INR3.5 per share
• General Staffing revenue: INR3,122 crores; EBITDA: INR46 crores
• Professional Staffing revenue: INR244 crores; EBITDA: INR25 crores; margin: 10.2%
• Overseas revenue: INR284 crores; EBITDA: INR17 crores; margin: 5.9%
• Net headcount: 4,61,531 associates (net addition ~2,000 in Q1; 6,500 in June)
• Professional Staffing headcount: ~6,000
• Overseas headcount: 5,599 (+18% YoY)
• General Staffing: 79 new contracts (9,000+ associates), 42,000 open mandates
• Professional Staffing: 12 new contracts, 1,200 open mandates (68–73% GCC)
• Construction vertical headcount: 2,500–3,000
• Gross margin PAPM (General Staffing): INR600–650
• Gross margin PAPM (Professional Staffing): INR23,000–25,000
• Zero gross debt as of June 30, 2025
• Collect & pay ratio in General Staffing: 76%
• Professional Staffing revenue contribution: 7% of total; EBITDA contribution: 29%
• Overseas revenue contribution: 8% of total; EBITDA contribution: 17–20%
• GCC exposure in Professional Staffing: 73%
• Interest cost in Q1: INR10 crores
• Demerger-related expenses in PAT: INR2 crores
• Interest on income tax refund in Q4: INR9.7 crores
• Great Place to Work rank: improved from 32nd to 19th
• Hamara Jobs: 5 lakh+ verified job listings annually to ONDC

Note: This is an AI generated summary of the earnings call. There may be inaccuracies in the summary. Please refer to the original transcript before making investment decisions.