Quess Corp share price gains 6% on NCLT's approval for three-way demerger

Quess Corp shares price gained 6 per cent to Rs 674.50 on the BSE in Friday's intraday trade, in an otherwise volatile stock market, after the Bengaluru Bench of the National Company Law Tribunal (NCLT), approved the company's three-way demerger, creating three publicly listed entities. 

 

On February 16, 2024, Quess Corp announced that its board of directors had approved a composite scheme of arrangement, providing for the demerger of Quess Corp into three independent entities. The demerger will ultimately result in three separate listed companies, i.e. Quess Corp (the remaining company), Digitide Solutions (Digitide) and Bluspring Enterprises (Bluspring).

 

Shareholders will receive one equity share in each resulting company for every share held in Quess Corp, with the demerger expected to enhance operational efficiency, unlock shareholder value, and enable distinct growth strategies.

 

At 09:35 AM, Quess Corp share was quoting 5 per cent higher at Rs 666.55 as compared to 0.05 per cent decline in the BSE Sensex. The company is a leading business services provider that leverages its extensive domain knowledge and future-ready digital platforms to drive client productivity through outsourced solutions. The stock had hit a 52-week high of Rs 875 on September 23, 2024.

 

The restructuring will result in Quess Corp continuing as India's largest workforce management company, employing over 500,000 individuals across nine countries. Digitide will focus on BPM, Insurtech, and HRO, leveraging AIdriven technology for automation and scalability. 

 

Bluspring, meanwhile, will specialise in infrastructure services, including facility management, food services, security services, and telecom infrastructure maintenance, while also operating 'foundit,' an AI-driven job portal, Quess Corp said in a statement.

 

Executive director Guruprasad Srinivasan will lead Quess Corp, while CFO Kamal Pal Hoda will head Bluspring, and Gurmeet Chahal will helm Digitide. The move is expected to enhance operational efficiency, unlock shareholder value, and enable focused growth strategies, ICICI Securities said in a note.

 

Meanwhile, in the April to December period of the financial year 2024-25 (9M FY2025), Quess Corp revenue witnessed a 10.6 per cent year-on-year increase, supported by growth in workforce management (WFM), OAM, and GTS with a growth of ~14.5 per cent, ~10.1 per cent, and 8.4 per cent, respectively. 

 

The margins stood at ~3.7 per cent in 9MFY2025, supported by optimised marketing spends, improvement in the OAM segment, and further reduction in cash burn of PLB and various productivity initiatives taken by the company. However, the company's margins faced some pressure due to increased investment in sales and marketing, development of new leadership team in light of the demerger, and festive season pass through for the associates, according to ICRA.

 

Going forward, the margins are expected to remain range bound due to intense competition, but may increase to a certain extent with companies actively focusing on rationalising low-margin contracts.

 

The company's revenue growth is expected to remain healthy in the upcoming years, supported by recovery in IT staffing, more clients shifting from the unorganised to organised players and increasing need for support services. At the same time, time taken for turnaround of the current loss-making business segment (PLB) and the margin trajectory thereon will remain a key monitorable, the rating agency said.