Quess Corp (QUESS) Q4 20/21 earnings summary

Executive summary

• FY21 revenue was nearly flat despite COVID-19 disruption: Q1 revenue contracted 19.5%, followed by a recovery in H2; headcount ended at 363,000, down 5.5% YoY.

• Cost optimization and stronger cash discipline supported recovery; monthly average SG&A costs fell over 24% YoY, while operating cash flow rose to ₹7.15bn from ₹3.61bn.

• Reported consolidated profit returned to ₹736.89m from a ₹4.32bn loss in FY20, which included substantial impairment and tax-related exceptional items.

Financial highlights

• Consolidated revenue was ₹108.37bn, down 1.4% YoY; H2 recovery offset first-half pandemic headwinds.

• Reported EBITDA was ₹4.58bn versus ₹6.58bn; it included a ₹1.19bn legacy-government-business provision and ~₹980m COVID impact in Excelus and Food.

• Adjusted for lockdown impact and the legacy-business provision, normalized EBITDA was ₹6.76bn, up 3% YoY; normalized EBITDA margin was 6.23%, up 25 bps.

• Consolidated PAT was ₹736.89m versus a ₹4.32bn loss; diluted EPS was ₹3.87 versus a loss of ₹30.22 in FY20.

• Operating PAT was ₹2.45bn versus ₹2.84bn in FY20; FY21 included a ₹520m one-time deferred-tax charge related to goodwill.

Outlook and guidance

• Long-term targets remain 20% ROE by FY23 and 20% YoY growth in operating cash flow.

• Target to return one-third of annual free cash flow to shareholders through dividends and/or buybacks, with the balance directed to growth.

• Priorities include organic EBITDA growth, better EBITDA-to-PBT conversion, lower debt, digital investment, and increased market share across existing segments.

• Management expected progressive recovery in demand and underlying business results in FY22 as COVID effects receded.