Quess Corp, India’s largest private-sector staffing company, expects its demerger process to be completed within a year, according to Chairman Ajit Isaac. The company plans to soon file an application with the National Company Law Tribunal (NCLT).
Isaac explained that the demerger aims to simplify the company’s structure, allowing each new entity to focus better, allocate capital more efficiently, and improve its market position. This move is also expected to re-rate the businesses positively.
In the past year, Quess Corp’s stock has risen 44%, outperforming the Sensex’s 22% gain. The stock currently trades at 30 times its trailing twelve months’ earnings, compared to TeamLease, a listed peer, which trades at 44 times. Quess Corp has an operating profit margin of 4% for FY24, better than TeamLease’s 1%, though TeamLease performs better on return on equity.
Quess Corp employs over 550,000 associates. In February, it announced the demerger to create a clearer corporate structure, allowing each entity to grow faster with better management focus and optimal capital allocation.
Under the demerger plan:
- Quess Corp will retain the workforce management business.
- Digitide Solutions will handle business process management (BPM), insurtech, and human resource outsourcing (HRO).
- Bluspring Enterprises will take over facility management, industrial services, and investment businesses.
Isaac highlighted that Quess Corp’s existing businesses already hold strong market positions. The staffing and payroll businesses are the largest in India, the tech business is among the top three, and the operating asset management business leads in the number of services provided.
With India expected to grow rapidly, the demerged entities will have better growth opportunities in their respective sectors. For example, Digitide Solutions, which currently has revenues of over $320 million, aims to reach $1 billion in revenue.
In April 2019, Quess Corp acquired a majority stake in AllSec Technologies at ₹320 per share through an open offer. Since then, AllSec’s stock has increased by 260%, currently trading at ₹1,165.
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