Financial Performance Highlights

Q2 FY27 Performance:

  • Consolidated revenue: ₹4,396 crores, up 15% year-on-year and 5% quarter-on-quarter
  • Adjusted EBITDA (excluding non-cash ESOP expense): ₹92 crores, up 20% YoY with margin of 2.1%
  • PAT: ₹75 crores, up 44% YoY with PAT margin of 1.7%
  • Diluted EPS: ₹5, up 45% YoY
  • Revenue includes one-time impact of ₹120 crores from new Labour Code implementation

H1 FY27 Performance:

  • Revenue: ₹8,578 crores, up 15% YoY
  • Adjusted EBITDA: ₹178 crores, up 22% YoY
  • PAT: ₹157 crores, up 53% YoY
  • EPS: ₹10.4 for H1
  • Total Labour Code revenue impact for H1: ₹298 crores

Segment-wise Performance

General Staffing:

  • Revenue: ₹3,823 crores, up 15% YoY and 6% QoQ
  • EBITDA: ₹57 crores, up 23% YoY and 11% QoQ
  • Net headcount addition: 20,857 associates
  • Total associates: ~504,000, up 4% YoY
  • 116 new contracts added in Q2
  • Highest ever sourcing: 56,576 associates (up 30% QoQ)
  • Highest ever cash collection: ₹4,285 crores
  • DSO improved to 24 days from 26 days
  • Manufacturing vertical fastest growing, adding 7,800 associates (up 11% QoQ)
  • Construction vertical EBITDA grew 71% YoY

Professional Staffing (Quess IT Solutions):

  • Revenue: ₹254 crores, up 13% YoY and 1% QoQ
  • EBITDA: ₹27 crores, down 2% YoY and 4% QoQ
  • Margin: 10.5% vs 12.2% YoY
  • Gross margin: 20.5% vs 17.5% two years ago
  • Gross margin grew 12% YoY and 3% QoQ
  • 27 new contracts added in Q2, 62 in H1 (exceeding full FY26)
  • GCC contribution: 71% of headcount and revenue
  • Headcount: 7,566 with net addition of 437
  • 25% of IT associates deployed in niche skills

Overseas Business:

  • Revenue: ₹318 crores, up 10% YoY
  • EBITDA: ₹22 crores, up 23% YoY
  • Margin: 6.9% vs 6.2% in Q1
  • Malaysia revenue grew 50%, Philippines grew 15%
  • 33 new contracts added
  • Middle East margin: 14.2% with flat revenues

Strategic Initiatives and Technology Investments

Priority 1 - Strengthening Core Business:

All three core segments showed growth: General Staffing (+15%), Professional Staffing (+13%), Overseas (+10%)

Priority 2 - Technology Investments:

  • The Brain Project (AI sourcing engine): Generated 1.4 lakh candidate leads and 24,700 offers since launch, accounting for 13% of General Staffing hiring
  • Expected 35,000-40,000 offers from this channel in H2
  • QMS (AI query management system): Handled 18,000 queries in first 4 weeks, with 20% fully resolved by AI
  • Target: 50% queries answered by AI by December 2026, 80% by March 2027
  • Project Confluence: Unified platform for client sale to collections, Phase 1 go-live in January 2027

Priority 3 - Quess 2.0 Foundation:

  • Global corridors: 135 workers mobilized to UAE in H1, MOUs with GSMAI and IOM
  • Digital platforms: BCPL turned EBITDA positive in Q2 after ₹6 crore burn in FY26
  • Paying clients grew from 14 in March to 54 in September
  • Fractional workforce: First deal signed with large FMCG brand for 350 associates
  • Quess IT Solutions: Building practices in cybersecurity, data/AI, and program management

Balance Sheet and Capital Allocation

  • Net cash position: ₹471 crores after paying FY26 final dividend of ₹45 crores in August
  • Cash collection exceeded ₹5,000 crores in Q2
  • Net operating cash flow for H1: ₹348 crores (including tax refunds)
  • Board approved interim dividend: ₹5 per share
  • Return on equity: 25% on trailing 12-month basis (up from 20% in FY26)

Other Financial Details

  • Non-cash ESOP expense: ₹6 crores in Q2, ₹8 crores in H1
  • Unallocated corporate expenses increased due to front-loaded ESOP accounting (₹20 crores expected in year 1, tapering to ₹15 crores in year 2)
  • Other income: ₹2 crores in Q2 (excluding one-time tax refund interest of ₹24 crores in Q1)

Regulatory and Legal Matters

  • 80JJAA: Four favorable judgments received (2 in Bombay, 2 in Delhi ITAT), hearing deferred to January 2027
  • EPFO matter: ₹72 crores contingent liability, hearing date awaited
  • Labour Code implementation: 95-96% compliant at H1 level
  • EPF wage ceiling increase from ₹15,000 to ₹25,000: 96.5% compliance achieved

Forward-looking Statements

Management guidance for H2 FY27:

  • Focus on volume growth in General Staffing
  • Return from investments in Quess IT Solutions
  • Scaling technology initiatives
  • Delivering on Quess 2.0 milestones
  • Expanding margins across segments
  • Professional Staffing margin target: 11-12% with exit near 12%
  • Digital platform expected to breakeven for full year FY27

Management Participants

  • Lohit Bhatia, Executive Director and Group CEO
  • Neeraj Jain, Chief Financial Officer
  • Nitin Dave, CEO - Quess Staffing Solutions
  • Kapil Joshi, CEO - Quess IT Staffing
  • Kushal Maheshwari, Head - Investor Relations

Moderator

Siddharth Zabak, IIFL Capital Services Limited