2 QUESS share price target reports by brokerages below. See what is analyst's view on QUESS share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
Quess Corp (Quess) reported strong Q2FY20 results, beating our estimates on the back of: i) Sustained growth momentum: The company clocked YoY growth of 27% in sales and 17% in EBITDA. Headcount addition of 60k in H1FY20 in general staffing hints at massive market share gains. ii) Earnings quality: Directional improvement with OCF/EBITDA at 55%, lower net debt, better collect & pay ratio, etc. iii) Receipt of payments related to Trimax JV: Quess has starting receiving payments, which should assuage investor concerns. The stock has corrected sharply over the past one year due to several concerns (M&A, balance sheet complexity, and JV-related potential write-offs). In our view, the correction more-than-adequately captures these issues. Retain‘BUY’ with unchanged TP of INR703.
We are introducing FY21E earnings and roll-forward our valuation to FY21E. We now expect Quess to report an EPS of Rs.26.3 in FY20E (earlier Rs.30.6, lowered margin assumption) and an EPS of Rs. 35.2 in FY21E supported by both recent acquisitions done by the company and organic growth. We recommend ADD rating on Quess with a revised target price of Rs.704/share (earlier Rs. 1072/share), valuing the company at a P/E multiple (20x FY21E). In India, every month ~1 million people are entering the workforce, generating sustainable employment becomes an imperative which opens huge growth opportunities for Quess.
We have upgraded our FY20/21 revenue estimate by 2.5/2% and EBITDA estimate by 8.3/7.6%. Considering that the some of the increase in amortization and forgone cash yiels will cushion the impact on PAT, our EPS estimate is revised upwards by 4%/3.2% for FY20/21. The steps QUESS is taking on improving margins, cash conversion and turning the performance of acquisitions have been impressive. We reckon the progress on the same would start reflecting in the form of an improved performance and valuations. While we remain encouraged by the long-term prospects of QUESS, we await more indicators of a combination of sustained 6%+ EBITDA margin and cash conversion to change our stance on the company. We adopt a DCF methodology to arrive at a price target of INR730/share. Maintain Neutral.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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