Shares of Quess Corp Ltd jumped more than 58% on debut on Tuesday, after the integrated business services provider’s Rs.400 crore initial public offering (IPO) saw a subscription of a whopping 144.50 times last week.
Shares of Quess Corp Ltd jumped more than 58% on debut on Tuesday, after the integrated business services provider’s Rs.400 crore initial public offering (IPO) saw a subscription of a whopping 144.50 times last week. The stock opened at Rs.499 and touched a high and a low of Rs.508.6 and Rs.480.05, respectively. The scrip closed at Rs.503 on BSE, up 58.68% from its offer price of Rs.317, fixed at the upper end of its Rs.310-317 price band.
“This (the listing) is more or less in line with our expectations,” said Gaurav Dua, head of research at Sharekhan Ltd.
“There was lot of demand for this IPO, and it was heavily oversubscribed. It was also priced at 35-40% discount to its comparable listed company—Teamlease Services Ltd,” Dua added.
Quess Corp’s IPO had witnessed the fifth highest overall subscription, in percentage terms, for any IPO since 2000. The IPO proceeds will be utilized towards repayment of debt, capital expenditure as well as working capital requirements, and funding acquisitions and other strategic initiatives.
“Quess, in our view, is well-positioned to maintain high revenue/Ebitda (earnings before interest, taxes, depreciation and amortization)/EPS (earnings per share) growth, driven by expected industry growth across all business segments and scope for margin improvement,” said Govind Agrawal, an analyst at brokerage firm Prabhudas Lilladher Pvt. Ltd, in a note on 29 June. Agrawal had said that while valuations may appear expensive at around 41 times FY16 EPS, that is well-supported by high revenue growth and scope for margin expansion, and recommended a “subscribe” to the IPO.
Quess Corp offers business services, including recruitment, temporary staffing, technology staffing, information technology products and solutions. The company reported a revenue of Rs.3,442.4 crore in fiscal year 2016 (12 months), compared with Rs.2,572.8 crore in fiscal year 2015 (15 months). Net profit of Quess Corp. grew to Rs.88.5 crore in the fiscal year 2015-16, compared with Rs.67.2 crore for fiscal year 2014-15.
How it is going to change rules of the game for all the stake holders in the Indian Staffing Companies
- Increased competition resulting in lower margins for all players
- Attrition at all levels across staffing industry
- Higher wages & compensation for staffing professionals reducing margins
- More and more Mergers & Acquisitions on the horizon - smaller players will be taken over by stronger / bigger firms
- Cash is king - the more the merrier as the industry needs funds to expand and grow business.
If you are an existing Staffing companies and looking for expert guidance and advise, feel free to reach me - 9880080321 or you can mail me at raghav.coo@gmail.com
