Summary
Quess Corp Limited - Q3 FY26 Earnings Call Summary Thursday, January 29, 2026 11:00 AM
Event Participants
Executives 6 Guruprasad Srinivasan, Kushal Maheshwari, Lohit Bhatia, Kapil Joshi, Neeraj Jain, Nitin Dave
Analysts 7 Akshay Chawla, Amit, Ankit, Deep Shah, Dipesh Mehta, Gunit Singh, Karan Gupta, Samay
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹3,930 crores | +3% QoQ; marginally lower YoY due to calibrated headcount management. |
| EBITDA | ₹80 crores | +28% YoY, +4% QoQ; reached a new quarterly milestone. |
| EBITDA Margin | 2.03% | +47 bps YoY; driven by higher contribution from high-margin segments and cost control. |
| Adjusted PAT | ₹62 crores | +29% YoY, +19% QoQ; excludes ₹7 crore one-time Labour Code impact. |
| Adjusted EPS | ₹4.1 | Positive growth reflecting consistent profitability improvements. |
| Headcount | 4,83,503 count | Broadly flat QoQ; impacted by seasonal churn in BFSI and Labour Code implementation. |
| Operating Cash Flow | 92% of EBITDA | High cash conversion reflecting disciplined working capital management. |
| Interim Dividend | ₹5 per share | In line with the 75% free cash flow payout policy over 3-year blocks. |
| General Staffing DSO | 24 days | Significant improvement driven by tighter credit control and focused collections. |
Geographic & Segment Commentary
- General Staffing: Reported revenue of ₹3,409 crores with an EBITDA of ₹45 crores (1.3% margin). Headcount remained steady at 470,774 despite seasonal de-hiring in BFSI, offset by 4,000+ additions in manufacturing and apprenticeships. The segment added 71 new enterprise contracts in Q3, totaling 222 YTD.
- Professional Staffing: Achieved record EBITDA margins of 12.5% on revenue of ₹230 crores (+42% YoY EBITDA growth). Strategic focus on Global Capability Centers (GCCs) resulted in 72% of headcount coming from this high-value segment. The unit added 18 new logos during the quarter with average revenue per associate at ₹1.2 lakhs per month.
- Overseas Business: Revenue stood at ₹290 crores with EBITDA crossing ₹20 crores (+26% YoY). Margins crossed the 7% milestone for the first time, led by double-digit margins in the Middle East (IT and non-IT staffing) and strong collections in the Philippines and Malaysia.
- Middle East: Operates at 11.5% to 12.5% EBITDA margins with a book size of over 2,000 associates. Management highlighted the addition of a high-margin IT talent layer (100 associates) as a key diversification move.
Company-Specific & Strategic Commentary
- Leadership Transition: Lohit Bhatia elevated to CEO effective Jan 1, 2026; Neeraj Jain joined as CFO on Dec 3, 2025, to sharpen execution and transformation.
- Labour Code Readiness: Conducted 830+ client consultations regarding the new Labour Code (effective Nov 21); management views this as a catalyst for formalization and consolidation.
- Product Mix Shift: High-margin businesses (Professional and Overseas) now contribute 50% of operating EBITDA despite representing only 14% of revenue.
- Digital Platform: Preparing to launch an AI-enabled “Hamara Jobs” marketplace to strengthen blue-collar hiring and overall operational productivity.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Headcount Addition | >15,000 net adds (Q4 FY26) | Driven by healthy open mandates of 37,000+ and strong sales pipeline. |
| Professional Staffing EBITDA | ₹30 crores run rate (Q4 FY26) | Reflects steady shift toward super-niche digital and technology roles. |
| General Staffing Margin | 1.8% (Medium to Long Term) | Aiming for 1.5%-1.6% in the near term via mix improvement and value-added services. |
| Long-term Scale | 1 million associates (4-5 years) | Strategic ambition to double global headcount while maintaining fiscal discipline. |
| Effective Tax Rate | ~10% (Ongoing) | Based on current business model and deferred tax assets. |
Risks & Constraints
| Risk | Context |
|---|---|
| Regulatory Change | The immediate implementation of the Labour Code caused a temporary pause in hiring during Nov-Dec as clients assessed financial impacts. |
| Client Concentration | Top 10 customers contribute ~40% of General Staffing headcount, though no single client exceeds 10% of segment revenue. |
| Government Receivables | ₹120 crore ECL provision remains from discontinued skilling projects; collections are delayed due to new RBI escrow processes. |
| Macro Demand | Seasonal softness in BFSI and Consumer/Retail verticals continues to provide periodic headwinds to headcount growth. |
Q&A Highlights
Labour Code Financial Impact
- Question: What is the recurring impact of the new Labour Code on margins? (Dipesh Mehta)
- Answer: One-time impact of ₹7 crores covers gratuity/leave truing-up for core employees; ongoing recurring impact is estimated at a minimal ₹1.5-2.0 crores due to existing wage structures (Neeraj Jain).
Middle East Margin Sustainability
- Question: How are Middle East margins (12%+) so much higher than the industry average (~4%)? (Siddharth Zabak)
- Answer: Driven by scale, optimized indirect costs, and a strategic shift into high-margin IT staffing alongside general staffing (Lohit Bhatia).
Receivabales Recovery
- Question: Is there any recovery from the ₹120 crore ECL provision taken in FY25? (Siddharth Zabak)
- Answer: Collections from state governments were delayed in Q3 due to new RBI escrow account procedures; recoveries are expected in Q4 and will flow directly to the P&L (Neeraj Jain).
Growth Trajectory
- Question: Why was headcount growth flat despite guidance of 10k-15k adds? (Amit)
- Answer: 21st November Labour Code implementation caused clients to pause and stock-take; however, 35,000+ open mandates suggest a rebound in Q4 (Nitin Dave).
Key Takeaway
Quess Corp delivered a resilient Q3 FY26, achieving a milestone quarterly EBITDA of ₹80 crores and expanding margins to 2.03% despite a flat sequential headcount. The quarter was defined by a significant structural shift, with high-margin segments (Professional Staffing and Overseas) now contributing 50% of total operating EBITDA. While the immediate implementation of the Labour Code on November 21 created a temporary hiring lull as clients recalibrated budgets, management proactively engaged in over 830 consultations to facilitate the transition. Financially, the company maintained a strong 92% cash conversion rate and improved General Staffing DSOs to 24 days. Looking ahead, Quess aims for a net addition of over 15,000 associates in Q4, supported by a healthy pipeline of 37,000 open mandates. The company remains committed to its “1 million associates” marathon, anchored by AI-led transformation and a disciplined 75% free cash flow dividend policy.
Want more insights like this?
Subscribe to get deep dives delivered to your inbox.
More Earnings Summaries
Explore more Q3 FY26 earnings call analyses: