Motilal Oswal is bullish on Quess Corp has recommended buy rating on the stock with a target price of Rs 1170 in its research report dated November 20, 2017.
Motilal Oswal's research report on Quess Corp
Quess Corp acquired 51% stake in Tata Business Support Services, a provider of Customer Lifecycle Management and Business Process Management. The company would fit into Quess' technology solutions portfolio (30% of revenue), strengthening offerings and providing cross-sell opportunities. Quess would pay INR1.53b in an all-cash deal, valuing TBSS at INR3b, implying a trailing sales multiple of 0.5x and EBITDA multiple of 5.4x. Valuations for the deal seem attractive given Quess' current multiples of 2.5x sales and 46x EBITDA. Our FY19/20 estimates for revenue/EBITDA/PAT increase by 8/12/8%, thereby increasing our price target by 12% to INR1,170, implying an upside of 35%.
OutlookWe value QUESS using DCF to arrive at a TP of INR1,170 (35% upside); our TP is up ~12% led by the acquisition. Valuations are rich, given its strong growth history and continued aggressive thrust on acquisitions. Over FY17-20E, we expect revenue/EBITDA/PAT CAGR of 31/42/62% (27/37/58% earlier), led by our assumption of 20% growth in organic business and incremental contribution by recent acquisitions. Long-term prospects stand bright, given high-growth opportunities, aggression shown on expansion and flawless execution.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Read More
