Quess Corp (QUESS) Q4 19/20 earnings summary

Executive summary

• FY20 revenue grew 29% to ₹109,914.82 million and EBITDA rose 42% to ₹6,578.02 million; reported PAT was a loss of ₹4,318.78 million, chiefly from exceptional impairment and tax items.

• Organic revenue growth was 26%, led by General Staffing growth of 56% YoY; operating PAT rose 11% to ₹2,835 million.

• COVID-19 disrupted activity in Q4 and clouded FY21 visibility; priorities include cash generation, debt reduction, sustainable growth and a 20% ROE target.

Financial highlights

• Consolidated revenue from operations was ₹109,914.82 million, up 29% YoY; standalone revenue was ₹77,402.32 million versus ₹56,947.89 million.

• Consolidated EBITDA was ₹6,578.02 million, up 42%; EBITDA margin increased 54 bps to 5.99%.

• Reported PAT was a loss of ₹4,318.78 million versus profit of ₹2,565.49 million; operating PAT was ₹2,835 million, up 11% YoY.

• Exceptional charges totaled ₹6,640.52 million: goodwill impairment ₹5,062.86 million, intangibles ₹1,334.81 million and associate-loan impairment ₹242.85 million.

• Normalised operating cash flow, excluding Ind AS 116, was ₹2,346 million; separately, reported consolidated operating cash flow reached ₹3,610.98 million, up 79% YoY.

Outlook and guidance

• Targeting >20% YoY operating cash flow growth and 20% ROE; plans include cost controls, lower finance costs, better collections and divestment or restructuring of underperforming businesses.

• FY21 planning reflected a step-down in asset projections amid COVID-19 uncertainty, with management assuming reasonable growth from the following year.

• Priorities include growing comprehensive facilities contracts, scaling digital services and HRO/CLM, and lowering exposure to cash-flow-poor government skilling programs.

• Dependo Logistics sale process was delayed by COVID-19, though buyer interest continued; Monster’s cash burn was reduced to a sustainable level, with recovery signs noted.