💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue for Q2 FY26 reached INR 3,832 Cr, growing 3% YoY. Segmental growth: General Staffing grew 3% YoY to INR 3,317 Cr; Professional Staffing grew 11% YoY to INR 224 Cr; Overseas Business grew 3% YoY to INR 290 Cr; and Digital Platforms surged 115% YoY to INR 0.5 Cr.

Geographic Revenue Split

The Overseas business contributed INR 290 Cr (approx. 7.6% of Q2 FY26 revenue), with growth driven by APAC and the Middle East. Singapore operations faced headwinds due to visa regulation changes, while domestic India operations account for the remaining ~92% of revenue.

Profitability Margins

Operating profit margins (OPM) remained range-bound at 1.8% in FY25 compared to 1.7% in FY24. Reported PAT for Q2 FY26 was INR 52 Cr (1.35% margin), while Adjusted PAT for FY25 stood at INR 210.2 Cr (1.4% margin), up 54% YoY from INR 136.4 Cr.

EBITDA Margin

EBITDA margin for Q2 FY26 crossed the 2% mark (2.00%), up 13 bps YoY. Absolute EBITDA reached a record INR 77 Cr, up 11% YoY. Professional Staffing achieved a high EBITDA margin of 12.2%, while General Staffing margins were thinner at 1.4% due to the impact of an NBFC client ramp-down.

Capital Expenditure

While specific future Capex figures are not disclosed, the company invested INR 90 Cr in dividends and maintained a net cash balance of INR 273 Cr in Q2 FY26. Investments are primarily directed toward digital transformation, AI-led productivity, and leadership bandwidth for the demerger.

Credit Rating & Borrowing

ICRA maintains a comfortable credit profile with Net Debt/OPBDITA at 0.2x as of March 31, 2024. The company has an average working capital buffer of INR 717.1 Cr. Interest expenses decreased 32% YoY to INR 38.6 Cr in FY25 due to lower debt levels.

⚙️ Operational Drivers

Raw Materials

As a service-oriented staffing firm, 'Human Capital' is the primary cost, with employee expenses accounting for 93.9% of total revenue in FY25, up from 91.4% in FY24.

Import Sources

Not applicable for a workforce solutions provider; sourcing is primarily domestic across India, Singapore, and the Middle East.

Key Suppliers

Not applicable; the company relies on its internal sourcing engine which added 55,000 associates in Q2 FY26 compared to 30,000 in Q1 FY26.

Capacity Expansion

Current capacity is measured by associate headcount, which stood at 483,115 as of Q2 FY26 (up 5% YoY). The company added 21,283 net associates in Q2 FY26, the highest in 6 quarters.

Raw Material Costs

Employee expenses rose to 93.9% of revenue in FY25. The company is rationalizing low-margin contracts, such as the sunsetting of a large MSP program, to improve the mix of high-margin business.

Manufacturing Efficiency

Efficiency is tracked via the Associate to Core FTE ratio, which improved to 286 in Q2 FY26 from 357 in Q2 FY25, indicating higher productivity per internal employee.

Logistics & Distribution

Not applicable; distribution is handled through a digital sales engine and a network of regional offices for staffing delivery.

📈 Strategic Growth

Expected Growth Rate

10-12%

Growth Strategy

The company aims for double-digit revenue growth by focusing on high-margin segments like GCCs (Professional Staffing) and Overseas business, which currently contribute 50% of total contribution. Strategy includes rationalizing low-margin MSP contracts and leveraging a 27,000-strong open mandate pipeline.

Products & Services

General staffing, IT staffing, facility management, domestic BPO, customer lifecycle management (CLM), and digital talent platforms.

Brand Portfolio

Quess, Conneqt, Allsec, foundit, Origint (GCC offering).

New Products/Services

Expansion of GCC (Global Capability Centre) offerings and AI-led productivity tools; GCCs are expected to be a primary driver for the 12.2% margin Professional Staffing segment.

Market Expansion

Targeting growth in APAC and Middle East regions for the Overseas business and deepening penetration in Indian manufacturing and BFSI sectors.

Market Share & Ranking

Quess is India's largest domestic staffing player with 483,115 associates and is ranked 36th among India's Best Employers 2025 by TIME/Statista.

Strategic Alliances

The company is undergoing a demerger to create three demerged entities to simplify the corporate structure and unlock value.

🌍 External Factors

Industry Trends

The industry is shifting toward tech-led hiring and gig work. Quess is positioning itself as a technology-enabled workforce solutions leader to capture the growing SME demand for digitized HRMS.

Competitive Landscape

Faces intense competition from large domestic and international players in staffing, and fragmented unorganized players in facility management.

Competitive Moat

Moat is built on scale (483k associates) and a mature sourcing engine (55k onboarded in Q2). Sustainability is driven by the 'Collect & Pay' model which ensures cash flow stability despite thin margins.

Macro Economic Sensitivity

Highly sensitive to festive season hiring (manufacturing/retail) and GST reforms which provide tailwinds for formal staffing.

Consumer Behavior

Moderation in private consumption and high inflation have negatively impacted consumer business spending, affecting the CRT (Consumer, Retail, Telecom) segment.

Geopolitical Risks

Visa regulation changes in Singapore act as a trade barrier, impacting the ability to deploy Indian talent overseas.

⚖️ Regulatory & Governance

Industry Regulations

Impacted by changes in labor laws, GST reforms, and specific sector regulations like NBFC staffing norms and international visa laws (Singapore).

Environmental Compliance

Not disclosed as a significant cost driver for this service-based business.

Taxation Policy Impact

Effective tax rate is a key monitorable post-demerger; FY25 tax was a credit of INR 4.1 Cr on a consolidated basis due to exceptional items.

Legal Contingencies

Exceptional items of INR 164.3 Cr in FY25 included expected credit losses (ECL) for discontinued projects and demerger-related expenses.

⚠️ Risk Analysis

Key Uncertainties

The margin trajectory in FY26 is a key uncertainty due to the exit from low-margin contracts and the impact of the NBFC sector slowdown (potential 5-10% impact on headcount growth).

Geographic Concentration Risk

High concentration in India (~92% revenue); Singapore visa issues highlight the risk of geographic regulatory shifts.

Third Party Dependencies

Dependency on subcontractor charges in the Professional Staffing segment, though this is being reduced through contract rationalization.

Technology Obsolescence Risk

Risk of being disrupted by AI in recruitment; mitigated by investments in AI-led productivity and the 'foundit' digital platform.

Credit & Counterparty Risk

Receivables quality is stable with a DSO of 25 days and a 76% Collect & Pay ratio, minimizing bad debt risk.