Concall AI

Quess Corp — Q4 FY26 earnings call

Call held 5 May 2026

Management summary

Quess Corp reported a strong Q4 and FY26, marked by significant margin expansion and improved profitability, particularly driven by its Professional Staffing and Overseas segments. The company maintained a healthy net cash position and announced a total dividend of ₹6 per share. While overall revenue growth was moderate, management emphasized a strategic shift towards higher-margin businesses and disciplined execution, positioning the company for sustainable growth.

Highlights

Q4 FY26 Revenue grew 6% YoY to ₹3,892 crores.
Q4 FY26 EBITDA increased 28% YoY to ₹86 crores, with margins expanding to 2.2%.
FY26 Adjusted PAT (excluding one-time exceptional item) grew 10% YoY to ₹230 crores, achieving a 20% ROE.
Professional Staffing delivered strong growth with FY26 revenue up 13% YoY to ₹930 crores and EBITDA up 43% YoY to ₹111 crores, with margins at 12.7%.
Overseas business showed consistent growth with FY26 revenue up 5% YoY to ₹1,197 crores and EBITDA up 21% YoY to ₹77 crores, maintaining margins above 6%.
Net cash position of ₹271 crores with zero gross debt, and strong operating cash flow conversion of 80%.

Concerns

Discontinued projects in General Staffing resulted in a 7,000 headcount loss during FY26.
Consolidated revenue growth for FY26 was moderate at 2% YoY, reflecting a calibrated approach.
Near-term softness observed in BFSI and CRT verticals within General Staffing.
Global factors and supply-side talent shrinkage impacted headcount growth in Q4 FY26.

Key financials

2 periods

Q4 FY26

Revenue
₹3,892 Cr
YoY +6%
EBITDA
₹86 Cr
YoY +28% QoQ +8%
EBITDA Margin
2.2%
PAT
₹64 Cr
YoY +167%
EPS
₹4.3

FY26

Revenue
₹15,305 Cr
YoY +2%
EBITDA
₹312 Cr
YoY +19%
EBITDA Margin
2%
Adjusted PAT
₹250 Cr
YoY +10%
Adjusted EPS
₹15.4
ROE
20%

What they filed

Q1 FY27: revenue up 14.5%, net profit up 60.8% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	3,705	4,019	3,656	3,651	3,832 +3%	3,930 −2%	3,892 +6%	4,182 +15%
Expenses	3,636	3,957	3,589	3,582	3,755	3,850	3,806	4,097
EBITDA	69	62	67	70	77 +12%	80 +29%	86 +28%	85 +21%
Margin	2%	2%	2%	2%	2%	2%	2%	2%
Other income	1	-1	-147	3	4	-5	7	26
Interest	10	9	9	10	13	13	14	14
Depreciation	10	10	10	10	10	11	11	10
Profit before tax	50	42	-99	52	57 +14%	51 +21%	69 +170%	86 +65%
Tax rate	-1%	1%	-4%	2%	10%	-8%	7%	4%
Net profit	51	42	-95	51	52 +2%	55 +31%	64 +167%	82 +61%
EPS	3.40	2.80	-6.41	3.42	3.46	3.68	4.30	5.48

How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue (Q4 FY26)

₹3,892 Cr Total

General Staffing ₹3,328 Cr 85.5%
Overseas Business ₹332 Cr 8.5%
Professional Staffing ₹232 Cr 6.0%

Capital allocation

high confidence

Debt Gross ₹0 Cr · Net cash ₹271 Cr

Our balance sheet remains strong and well-capitalized. The net cash position as of close is INR 271 crore. We have zero gross debt in the company.
Dividend ₹3/share (final)

the Board has proposed a final dividend of INR 3 along with a special dividend of INR 3 marking our 10 years of IPO.
Liquidity Cash ₹271 Cr

Our balance sheet remains strong and well-capitalized. The net cash position as of close is INR 271 crore.

Guidance & targets

Profitability

Blended EBITDA Margin Profitability · medium-term (3 years) · Medium confidence 2.4%

If the blending of our current portfolio remains where it is, a 2.2% is possible. However, given the fact that General Staffing is a 1.5% EBITDA margin business, we are anticipating a higher clip rate growth in FY27 and thereafter in terms of headcount. So, it would be safe to say that in an immediate term, a (+2%) margin in a medium-term going towards a 2.4%.

— Lohit Bhatia
Professional Staffing EBITDA Margin Profitability · medium-term · High confidence 11-12%

we would continue to remain and measure ourselves in the 11-12% margin category for the medium term as well.

— Lohit Bhatia
Overseas Business EBITDA Margin Profitability · ongoing · High confidence +6%

We would continue to keep working ourselves towards a (+6%) margin as far as our international mix and book is concerned.

— Lohit Bhatia

Headcount

General Staffing Headcount Growth Headcount · FY27 · High confidence 10-11%

We feel that this year, we will be able to come back on a 10% to 11% headcount growth and 12% to 13% revenue growth.

— Lohit Bhatia
Professional Staffing Headcount Net Addition Headcount · next couple of years · High confidence 10-12%

I am confident that the net addition for next couple of years will be in double digit 10% to 12% what you are expecting.

— Kapil Joshi

Revenue

General Staffing Revenue Growth Revenue · FY27 · High confidence 12-13%

We feel that this year, we will be able to come back on a 10% to 11% headcount growth and 12% to 13% revenue growth.

— Lohit Bhatia

Tax

Effective Tax Rate (ETR) Tax · next three years · High confidence 7-10%

I would say from an ETR perspective, we should be looking at a 7% to 10% range.

— Neeraj Jain

What to watch in Q1 FY27

Labor Code Implementation Clarity

Q1/Q2 FY27

Current Rules not yet notified, client confirmations pending

Target Full confirmation from clients on approach

Why it matters

Clarity on Labor Code implementation will determine potential revenue/cost impacts and strategy adjustments for the company.

I think we expect more and more responses to pick up in Q1 and Q2 from confirmation from the client side in terms of which approach they want to take. So, hopefully by Q1 and most likely by end of Q2, we should be able to have full confirmation from clients and accordingly, we will take that impact.

Risks & concerns

Geopolitical situation in Middle East
medium

Analyst asked about potential impact on Middle East business; management stated they are watching carefully but diversified portfolio and essential services nature have mitigated impact, with record Q4 performance.

Analyst acknowledged
Labor Code implementation uncertainty
medium

Rules are yet to be notified, and client confirmations on approach are pending, expected by Q1/Q2 FY27.

Both acknowledged
AI impact on staffing demand
medium

Analyst raised concerns about AI impacting hiring; management views it as an opportunity for niche, experienced talent, creating a demand-supply gap that staffing companies can fill.

Analyst acknowledged
Near-term softness in BFSI and CRT verticals
low

Certain verticals saw near-term softness, but this was offset by stability in other lines of business.

Management acknowledged
Global factors and supply-side talent shrinkage
low

Headcount growth remained measured in Q4 due to global factors and supply-side talent shrinkage.

Management acknowledged
80JJAA litigation
low

Industry-wide litigation, matter is sub-judice, but company continues to avail exemption and expects no impact.

Analyst acknowledged
GST litigation
low

Early stage litigation involving multiple parties, slow progress expected, no concrete conclusion this year.

Analyst acknowledged

Q&A highlights

7 direct

Overseas Business Growth Sustainability and Geopolitical Impact Direct

Fourth Quarter has been particularly aided by the revenue jump from INR 290 crores to INR 332 crores. This is actually demonstrated by three moving parts and segments. #1. Core organic revenue growth as well as one-time pass-through put together that has expanded the book. #2. The second has been expanded by new customer addition during this quarter as well. #3. And third has been an advantage of the currency devaluation of the Indian rupee against the currencies that we are operating in all of these geographies.

Analyst questioned the sustainability of the sharp Q4 growth and potential risks from the Middle East situation, which management addressed by detailing diversified growth drivers and portfolio resilience.

Asked by Siddharth Zabak

General Staffing Margin Expansion and Sustainability Direct

GS also has modeled their next 4-year trajectory on value and volume. We have today customers in construction, we have customers in value-added services and manufacturing which has been yielding slightly higher margin than the margins that we have seen traditionally in this business.

Analyst sought clarity on the drivers and sustainability of the 20bps YoY margin expansion in General Staffing, a key segment for the company.

Asked by Siddharth Zabak

Overall Blended Margins and Impact of Discontinued Projects Direct

To your question on the discontinued project, as you would remember, closer to our demerger timeline, we had said any business which does not meet the financial metrics of the company and does not yield us the cash realization, we will exit and discontinue such businesses. This was one of the projects which we were doing, which was 7,000-odd resources, but a milestone-based project, which in this financial year we have completely closed and dialed down. The impact of revenue from this is roughly about 1.3% at about INR 200 crores.

Analyst inquired about the future trajectory of blended margins and the financial impact of the 7,000 headcount loss from discontinued projects, which management clarified as a strategic exit of low-profitability work.

Asked by Vikas Ahuja

GCC Margin Profile and Risks from US Headcount Reductions Direct

When you look at GCCs, they are coming to India to solve a certain technology problem for themselves, and they are not just looking at India as a cheap base to solve talent, but they are also looking at India for transformation and beyond transformation as well. In GCCs, you need ready talent which comes with skills, which comes with experience, and which comes with minimum 7 to 8 years of exposure and more.

Analyst probed into the differentiation of GCC margins and potential risks from a global tech slowdown, which management addressed by highlighting the high-value, experienced talent demand in GCCs.

Asked by Vikas Ahuja

General Staffing Growth Outlook for FY27 Direct

if you negate for that one-time event last year, you will actually notice that the business has grown 10% year-on-year. Negated for that, the number on the balance sheet obviously comes to 2%. ... We feel that this year, we will be able to come back on a 10% to 11% headcount growth and 12% to 13% revenue growth.

Analyst questioned the muted FY26 General Staffing revenue growth and sought specific guidance for FY27, which management provided with double-digit growth targets.

Asked by Dipesh Mehta

Professional Staffing Growth Tapering and Labor Code Impact Partial

So, Professional Staffing I understand your concern, but it is very cyclic. If you see H1 versus H2, what happened in H2, we have furlough impact and the number of working days since we work on T&M model in Professional Staffing, number of working days also impact our revenue. And Q3 and Q4, specifically Q4 has the lowest working days in a whole year.

Analyst noted a tapering in Professional Staffing revenue growth and asked about the Labor Code's impact, receiving an explanation for Q4 seasonality and an update on Labor Code monitoring.

Asked by Dipesh Mehta

Differentiation of Professional Staffing Margins vs. Competitors Direct

structurally what you are seeing as a result today in FY26 is very tireless efforts and execution which has been put way back in 2020-2021. Post-COVID, we were of a clear realization that the market will under vamped on margin side across the entire industry and our Professional Staffing team led by Kapil Joshi and his entire leadership team worked very hard on the facts of what would create future growth in India.

Analyst questioned why Quess's Professional Staffing margins were significantly higher than competitors, leading to management detailing their strategic shift to high-value, experienced talent and GCC focus since 2020-21.

Asked by Amit Chandra

GCC Headcount Growth Drivers and Future Outlook Direct

I am confident that the net addition for next couple of years will be in double digit 10% to 12% what you are expecting. And 50% of this should come from the new signup and 50% from existing logo where we are serving right now.

Analyst sought understanding of the drivers for GCC headcount growth and its future trajectory, receiving specific targets and a breakdown of new vs. existing client contributions.

Asked by Shankar Narayanan

2 min read 7 chapters

Detailed narrative

Strong Q4 and FY26 Performance with Margin Expansion

Quess Corp reported a robust Q4 FY26 with revenue of ₹3,892 crores, a 6% YoY increase, and EBITDA of ₹86 crores, up 28% YoY, with margins expanding to 2.2%. For the full year FY26, revenues stood at ₹15,305 crores, and EBITDA grew 19% to ₹312 crores. Adjusted PAT for FY26 was ₹250 crores, a 10% YoY growth, resulting in a healthy 20% ROE. The company's EBITDA-to-operating cash flow conversion remained strong at 80%.

Strategic Portfolio Shift Towards Higher-Margin Businesses

The company has seen a clear shift towards higher-margin, more sustainable segments, with these businesses now contributing 50% of total profitability. This structural shift is beginning to reflect in the margin trajectory. Management aims for a blended EBITDA margin of 2.4% in the medium term, up from 2.2% exiting Q4 FY26, driven by continued focus on high-value offerings.

Professional Staffing as a High-Quality Growth Engine

Professional Staffing continued its strong performance, with FY26 revenue growing 13% YoY to ₹930 crores and EBITDA surging 43% YoY to ₹111 crores, achieving margins of 12.7%. This growth is primarily driven by a focus on high-margin digital and technology roles, strong GCC traction (71% of headcount deployment), and rationalization of low-yield engagements. The segment added 61 new logos during the year, reinforcing its role as a structural margin driver.

Resilience and Future Outlook for General Staffing

General Staffing demonstrated resilience, adding 26,000 net associates in FY26, despite a 7,000 headcount loss from discontinued projects. FY26 revenue was ₹13,176 crores, with EBITDA at ₹189 crores. Management expects a rebound in FY27, targeting 10-11% headcount growth and 12-13% revenue growth, supported by investments in verticalization, technology, and recruiter hiring. DSO remained tightly managed at 24 days.

Diversified Growth and Margin Expansion in Overseas Business

The Overseas business delivered consistent growth, with FY26 revenue up 5% YoY to ₹1,197 crores and EBITDA up 21% YoY to ₹77 crores, maintaining blended margins above 6%. Key highlights include 125 new logos added, 11% EBITDA margin in the Middle East, 83% revenue growth in Malaysia, and 49% revenue growth in the Philippines. The international portfolio is now better balanced and structurally more profitable.

Disciplined Capital Allocation and Shareholder Returns

Quess Corp maintains a strong balance sheet with a net cash position of ₹271 crores and zero gross debt. The Board approved a final dividend of ₹3 per share, along with a special dividend of ₹3 per share, commemorating the company's 10th IPO anniversary. This reflects confidence in cash generation and a commitment to shareholder returns, while ensuring adequate liquidity for growth objectives.

Focus on AI-led Solutions and Technology Platforms

The company continues to invest in digital platforms, with a sharpened focus on AI-led solutions for the next three years. Initiatives include building a blue-collar marketplace and AI-driven recruitment and workforce solutions. This strategy aims to strengthen Quess's long-term position in technology-led workforce management platforms and enhance talent acquisition innovation.

This is an AI-generated summary of a publicly available earnings call transcript.

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