Quess Corp shares jump 16% to hit one-year high today; here's why

Shares of Quess Corp Ltd rose sharply in Monday's trade after the company announced a three-way demerger of its diversified businesses. The stock surged 15.79 per cent to hit a one-year high of Rs 580. The scrip saw heavy trading volume today as 92,000 shares were last seen changing hands on BSE. The figure was higher than the two-week average volume of 14,000 shares. Turnover on the counter came at Rs 5.23 crore, commanding a market capitalisation (m-cap) of Rs 8,255.39 crore.

"Demerger of three businesses is a positive development for the company. Quess Corp's stock still looks good and there's sufficient amount of upside left on the cards," Chakri Lokapriya, CIO and MD at TCG AMC told Business Today TV.

Nuvama said, "Quess has announced a demerger of its current business into three separate entities. The demerger process is expected to be take 12–15 months, and all the three entities will have a mirror shareholding upon demerger." The three separate entities would be workforce management, digitide solutions and bluspring
enterprises.

"Our initial calculations suggest that even if one were to value the first entity (staffing) at a 20 per cent lower EV/EBITDA of 28–30x (Teamlease trades at 36x), Quess' staffing business alone should get valued around the current market cap of the entire listed group today. The market is likely to assign lower multiples to the other two entities initially due to their lower growth rates, but Quess has set aggressive targets for them as well—for instance, a $1 billion revenue target for Digitide from $280 million," the brokerage mentioned.

"We view Quess currently as an attractive risk-reward play with limited downside potential and strong value unlocking triggers. Retain 'Buy' with a 12-month target price of Rs 630," it added.

As of December 2023, promoters held 56.65 per cent stake in the company.

(Disclaimer: Business Today provides stock market news for informational purposes only and that should not be construed as investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.)

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