Quess Corp Ltd Q1 FY2026 Concall Summary

Key Takeaways

• General Staffing turns a corner: June 2025 was the first month since December 2024 with an uptick across headcount, new demand, open mandates and fulfillments, with net adds of 6,500 in June alone.
• Professional Staffing delivers a record quarter: The segment posted its best performance in over 15 years, with EBITDA doubling over two years on a stable headcount of ~6,000, driven by a mix shift toward higher-value GCC work.
• Overseas diversification offsets Singapore headwinds: While Singapore EBITDA fell 41%, Middle East rose 48%, Malaysia nearly doubled, and the Philippines grew 56%, making the Middle East the largest overseas contributor by EBITDA.
• Origint and ONDC open new growth vectors: The company launched a GCC-as-a-service brand and became the first anchor network participant on ONDC for work opportunities, both early-stage but with healthy pipelines.
• What to watch next quarter: Whether the 42,000 open mandate in General Staffing converts into net adds through the festive season, the pace of Professional Staffing’s margin sustainability, and any early signal from the ELI scheme after its August 1 launch.

General Staffing: Recovery and Margin

• June inflection: After a decline in April, the quarter ended with net adds of 2,000, with 6,500 added in June alone. The majority of new additions came from manufacturing, followed by BFSI, while consumer, retail and telecom saw marginal declines.
• Open mandate signals demand: An encouraging open mandate of 42,000 positions heading into the festive season, with Q2 already seeing mandates come in from the manufacturing segment.
• Margin improved despite muted headcount: Segmental EBITDA rose 3% YoY and 6% QoQ, with margins expanding 9 bps sequentially and 4 bps YoY, driven by operational efficiency and a higher mix of margin-accretive business.
• Associate-to-core ratio dipped temporarily: The ratio declined to 307 as a cautious step; 31% of fulfillment came through sourcing. The company ramped up recruiting capability ahead of the July-to-Diwali season and expects the ratio to reverse in the second half.
• Seasonality was disrupted: Q1 is typically strong for retail and CRT due to summer demand, but an unusually early monsoon across India meant hardly any summer, and retail came out negative. BFSI, which was negative in Q4, turned positive with new customer additions.
• Interest rate tailwind: From April onward, banking interest rates have substantially come down, leading to more openness from NBFCs and banks to add people, with new logos and more open mandates received.
• Operating cash flow temporarily soft: Because General Staffing was muted and much of it operates on a collect-and-pay model, operating cash flows were affected in Q1. As General Staffing shows better traction in Q2, that will help.

Lohit Bhatia: "See, quarter 1 for us, particularly is supposed to be the season summer in India and retail and CRT is supposed to do exceptionally well. However, this year, monsoon has practically arrived across the country much earlier, and we hardly had any practical summer even in northern parts of India, there was no summer."

Professional Staffing: Record Quarter and GCC Dominance

• Best quarter in over 15 years: Performance was driven by gross margin expansion, operational efficiency, and strong financial governance from modern initiatives in systems and processes.
• GCC concentration at 73%: The business was verticalized almost a decade ago when GCC was just gaining traction, giving an early mover advantage. Growth came from digital, high-tech, telecom, media, technology and electronics sectors. BFSI continued to drive growth, followed by telecom, product and tech. Pharma, retail, auto and manufacturing faced tariff-related headwinds.
• Mix shift doubled EBITDA on flat headcount: Even with headcount stable at ~6,000, segment EBITDA doubled over two years by shifting a large tech workforce from shared services to emerging technology within GCCs, enhancing capability in data and AI, cloud, cybersecurity and platform engineering.
• New logo momentum: 12 new logos were acquired in Q1, 10 of them from the GCC space, with a healthy open mandate of 1,200 positions representing almost 75 days of work.
• AI in service delivery: Recent investment in an AI-driven delivery model has helped deliver better speed and quality to GCCs and consolidate the company’s position in that space.
• Margin sustainability expected: Management believes both revenue growth and margin are sustainable, with Origint adding a new execution capability as a differentiator. The segment is expected to continue delivering double-digit EBITDA margins.

Kapil Joshi: "So on your question, whether the revenue growth and margin would be sustainable, I think very much we will be able to hold it. Like Guru has mentioned in his opening remarks, Origint, we recently started GCC as a service and with execution capability, what we have being a differentiator in the market, I think we will be able to capitalize on it."

Origint: GCC-as-a-Service Launch

• End-to-end GCC setup proposition: Origint provides consulting on talent availability using proprietary data on healthcare tech and high-end niche IT talent, coaches customers on geography selection, and helps accelerate startup by setting up end-to-end infrastructure premises. The model is not capex-heavy; it operates on a cost-plus-markup basis.
• Execution capability through existing assets: The company can manage end-to-end delivery through its own companies Bluspring and Digitide.
• Early traction: Origint has gone live with one healthcare wearable company, with two more in the pipeline being worked on. A healthy pipeline of prospects is expected to materialize in the next couple of months.
• Margin expectation: Management expects Origint to deliver a double-digit EBITDA margin on a blended basis, describing GCC as a value-accretive business.
• Revenue sizing is premature: It is too early to put a number on what percentage of the 700-plus new GCCs the company would deliver, but management sees a good opportunity to be in that space.

Overseas Business: Diversification Working

• Singapore headwinds persist: Singapore continues to face visa-related challenges impacting overall performance, with Professional Staffing under pressure.
• Diversification across geographies: While Singapore EBITDA fell 41% over the last year, Middle East EBITDA rose 48%, Malaysia went up by almost 100%, and the Philippines grew by 56%. The Middle East is now the largest overseas contributor by EBITDA.
• Strategic shift within Singapore: The company doubled down on expanding toward a more localized General Staffing business, now crossing 300 associates, which is helping offset the decline in Professional Staffing.
• APAC and intercountry deals: The company started signing more APAC-wide and intercountry deals rather than single-country deals, helping other geographies win marquee customers.
• Middle East growth drivers: Strong growth was driven by headcount increase and better realization, with the IT sector as the main contributor, followed by traditional General Staffing in retail and e-commerce.
• Trend expected to continue: Management believes these diversification trends will continue as they go along.

Lohit Bhatia: "While Singapore's EBITDA came down in the last 1 year by 41%, we would be glad to know that Middle East EBITDA went up by 48%. Malaysia went up by almost 100% on its base and Philippines went up by 56% on its base."

Construction Vertical: Early-Stage, High-Margin Bet

• Cautious, concentrated approach: Construction is one of India’s biggest informal labor markets, with an estimated 5 crore people and 95-97% in the informal sector. Quess is working with only three very large marquee construction giants across about 30 construction sites.
• Different business model: Unlike General Staffing’s flat service fees, construction operates on a bill-rate model closer to Professional Staffing, because of the niche profile of getting skilled workers on site and mobilizing them across the country. Customers pay for good talent, quality, and extremely good compliances and governance.
• Gross margin potential is significant: Gross margins in construction can be 3x to 4x the gross margin of a typical General Staffing placement.
• Q1 was rain-affected, but on plan: The business gets highly impacted by rains and saw a little decline in Q1, though it was ahead of plan. Q2 and Q3 have an uptick as per plan, with upside potential toward the end of this financial year. Contribution to the group is fairly insignificant on a cash bottom-line basis today.
• No near-term guidance: Management said it is early days to comment on how much construction can contribute to General Staffing revenue and EBITDA in FY26 or FY27.

Lohit Bhatia: "To give you one perspective, the gross margins in this can be 3x to 4x the gross margin of a typical general staffing person applied. But it is a long way forward for us. We are still very, very small in this right now."

Digital Platforms and Policy Tailwinds

• ONDC anchor partnership: Quess became the first company to join ONDC as an anchor network participant in the work opportunity domain, integrating its Hamara Jobs platform into the ONEST platform focused on skilling and employment. This will contribute 5 lakh-plus verified job listings annually to the ONDC network and opens up a network where Quess does not currently focus.
• ELI scheme goes live August 1: The Cabinet approved the employment-linked incentive scheme in July, and it goes live for the entire country on August 1 for the next 2 to 4 years. The fine print and rules are expected on August 5. Teams are working closely with the Ministry of Labor and the Employees Provident Fund Organization, which is the implementation body.
• ELI financial impact this year is negligible: Because the scheme takes effect in August and requires a minimum of six months of employment to qualify, the impact will be insignificant for this financial year.
• ELI assessment deferred: Management declined to provide an early assessment of gross margin changes from the scheme, saying the framework is just ready and they need to see the fine print first. They may be able to guide more closely after the September or December quarter once they observe gross and net additions.

Guruprasad Srinivasan: "The modeling of it is a little early right now. As we cross, say, 1 quarter and we see our gross additions and net additions, maybe we'll be able to guide more closely after the September or the December quarter."

Guidance & Commitments

Key Metrics