Thank you. Ladies and gentlemen, good morning, and thank you for joining us on the post Q3 FY 2026 and nine-month FY 2026 results conference call for Quess Corp Limited.

It is my pleasure to introduce the senior management team of Quess Corp who are here with us today to discuss the results. We have Mr.

Guruprasad Srinivasan, Executive Director; Mr. Lohit Bhatia, CEO; Mr.

Kushal Maheshwari, Head Investor Relations and Treasury; Mr. Neeraj Jain, CFO; Mr.

Kapil Joshi, CEO of Quess IT Staffing; and Mr. Nitin Dave, CEO of Quess Staffing Solutions.

We will begin the call with opening remarks by the management team, and thereafter we will open the call for a Q&A session. I would like to now hand over the call to Mr.

Kushal Maheshwari to take the proceedings forward. Thank you, and over to you, Kushal.

Thank you, Siddharth. Good morning everyone, and thank you for joining us for our Q3 FY 2026 and nine-month FY 2026 earnings call.

The information, data, and outlook shared by the management during the call are forward-looking and subject to prevailing business conditions and government policies. All forward-looking statements are subject to economic growth or other risks faced by the company.

Please refer to slide number two of the investor presentation for the safe harbor clause. With that safe harbor clause, I will now hand over the call to our Executive Director, Mr.

Guruprasad Srinivasan, for his opening remarks. Over to you, Guru.

Thank you, Kushal. Good morning everyone, and thank you for joining us today for Quess Corp's Q3 FY 2026 earning call.

Before moving to quarterly performance, I'd like to briefly outline the strengthening of one leadership team at Quess. The board has elevated Lohit Bhatia to the role of Chief Executive Officer effective 1st of January 2026.

Lohit has completed over 15 years at Quess and has been responsible for India and global operations for several years, and been directly accountable for execution of general and professional staffing in India and international markets, including managed services. In addition, Neeraj Jain has joined us as Chief Financial Officer on 3rd of December 2025.

Neeraj brings in deep experience in global finance, business restructuring, and transformation. Overall, this is a planned succession reflecting leadership depth with the organization.

It is designed to sharpen execution while maintaining consistency on strategy, margin, cash flows, and governance. With that, I'll hand it over to Lohit, who will take you through detailed quarterly business update, followed by Neeraj covering on finance update.

We all will be available later in the call for question and answers. Over to you, Lohit.

Thank you, Guru. Good morning everyone.

Thank you for joining Quess Corp's Q3 and nine-month FY 2026 earnings call today. We are pleased to report a quarter of steady execution, margin expansion, and disciplined financial performance, despite a mixed demand environment across sectors due to labor code implementation.

Q3 reflects the strength of our diversified portfolio, operating discipline, and continued focus on profitability with cash flow. During the quarter, we reported revenue of ₹3,930 crore, representing a 3% quarter-on-quarter growth.

The EBITDA stood at ₹80 crore, a new quarterly milestone for our company, marking a 28% year-on-year increase and a 4% sequential growth, with EBITDA margin expanding to 2.03% this quarter. The adjusted PAT came in at ₹62 crore, which excludes the one-time exceptional item of ₹7 crore due to the impact of labor code as assessed by the company, up 29% year-on-year and up 19% quarter-on-quarter.

This corresponds to an adjusted EPS of ₹4.1 per share for the quarter. Our operating cash flow conversions remained strong at 92% of the EBITDA delivered, underlining the quality of earnings and working capital discipline.

Headcount stood at 4,83,503 associates, broadly flat sequentially as expected, reflecting a seasonal churn in select verticals and calibrated hiring aligned with demand visibility greatly impacted by the labor code implementation on 21st of November. Overall, Q3 FY 2026 was a quarter of balanced growth, improving margins, and consistent delivery against our operating plan.

Let me walk you through the performance of each of the business segments. General staffing: stable scale, strong contract wins, and execution discipline.

General staffing continued to demonstrate resilience and scale across the quarter. The segment revenue stood at ₹3,409 crore, with an operating profit margin for the segment at ₹45 crore, reflecting in a stable performance despite the seasonal softness in the BFSI and the consumer, retail, and telecom, partially offset by the growth in the M&A-led headcount additions.

Headcount in the segment remained steady at approximately 4,70,774 associates, with over 4,000 additions coming primarily from the manufacturing and apprenticeship segment in the quarter. We added 71 new enterprise contracts in this quarter, taking the total YTD to 222 new contracts, reinforcing our leadership position across the BFSI, manufacturing, retail, and infrastructure.

Operational execution remained strong. Collect-and-pay coverage stood at 76%, and average DSO improved to 24 days, driven by a tighter credit control and focused collections.

The open mandate remained healthy at over 37,000 as we began the fourth quarter, giving us confidence of a pickup in demand and headcount during this quarter, Q4, particularly from manufacturing and construction as well. During the quarter, we conducted over 830 client consultations on the impact of labor code changes, an engagement that will continue through Q4.

Over the medium to long term, we believe the labor code will drive greater formalization, consolidation, and stronger governance, creating structural tailwinds for Quess given our scale and compliance capabilities. Moving on to our professional staffing segment, which has sustained margin expansion and high-quality growth.

The professional staffing delivered an excellent quarter for us, continuing its trajectory of profitable growth. The segment revenues stood at ₹230 crore, while EBITDA increased to ₹29 crore, representing a 42% year-on-year growth, while EBITDA margin further expanded to 12.5%, an all-time high for our segment here.

This performance was driven by a disciplined focus on high-margin contracts, rationalization of low-yield engagements, and a strong demand for GCCs. GCCs now account for 72% of the total professional staffing headcount, reflecting our strategic positioning in higher-value digital, technology, and consulting roles.

Headcount during this quarter grew to 6,934 associates, adding 18 new logos in Q3 and overall 48 new logos during this financial year. Open mandates remain steady at over 1,300.

CRT vertical within professional staffing has emerged as the largest vertical for the division, followed by IT services and consulting. We remain confident that double-digit margin in professional staffing are structurally sustainable, supported by strong client demand, pricing discipline, and deeper wallet share with existing customers.

Within IT staffing, the average revenue per associate is now approximately ₹1.2 lakh per month, reflecting the quality of deployment and the seniority of roles we support across the client base. Moving to overseas business: margin improvement and regional diversification.

Our overseas business delivered another quarter of margin expansion and improved execution. Revenue for this segment stood at ₹290 crore, while EBITDA crossed the ₹20 crore mark, translating into a 26% year-on-year growth for this BU, with margins crossing 7% for the very first time.

The Middle East continues to be a standout performer for us, delivering double-digit margins, supported by near 100% collection efficiency and growth in both IT and non-IT staffing. Malaysia saw strong traction with the addition of large new contracts, while the Philippines delivered robust collections and crossed 700 headcount with double-digit margins.

Singapore revenues was softer during the quarter. EBITDA showed sequential improvement, aided by cost optimization as well as an increased focus towards the new business launched last year of general staffing.

Overall, our international portfolio now is more balanced than ever before, with a diversified share of profitability. Moving on to the last, which is our digital platform, which is under the investment phase.

We have a renewed strategy to take it forward. We're preparing to launch the AI-enabled Hamara Jobs Marketplace, aimed to further strengthen our leadership in blue-collar hiring.

I'm particularly proud to share that Quess Corp has been certified as a Great Place to Work for the seventh consecutive year. The collective voice of our people has proudly elevated Quess from a large organization category to the mega organization category this year.

This prestigious award highlights our unwavering dedication to our colleagues. To summarize, the Q3 FY 2026 reflects consistent execution, margin expansion, and strong cash discipline, even as we navigate near-term demand variability in select segments.

Our diversified business model, leadership in staffing, and increased share of high-margin business positions us well for sustainable, profitable growth. With that, I will now hand over to our Chief Financial Officer, Neeraj Jain, to talk us through the financial performance of this quarter.

Thank you, Lohit. Good morning everyone, and thank you for joining us for Quess Corp Q3 FY 2026 earnings call.

I will begin with our headline financial performance for the quarter, followed by a segment-wise financial review, and I'll conclude with key balance sheet, cash flow, and profitability observations. I'll start with financial highlights for Q3 FY 2026.

Q3 FY 2026 was a quarter of steady revenue growth, meaningful margin expansion, and strong cash discipline, reflecting the benefits of our continued focus on profitability, mix improvement, and execution rigors. Consolidated revenues for the quarter stood at ₹3,930 crore, representing a 3% quarter-on-quarter increase while being marginally lower on a year-on-year basis due to calibrated headcount management.

EBITDA for the quarter came in at ₹80 crore. It's a new quarterly milestone for the company.

It is up 28% year-on-year and 4% sequentially. EBITDA margins expanded to 2.03%, improving by 47 basis points year-on-year, reflecting operating leverage, higher contribution from our higher-margin businesses, and tighter cost controls.

Reported PAT stood at ₹55 crore, up 32% year-on-year and 6% sequentially. On an adjusted basis, excluding one-time exceptional cost relating to labor code provisioning, our adjusted PAT is at ₹62 crore, up 29% year-on-year and 19% quarter-on-quarter, with adjusted EPS of ₹4.1 per share.

Importantly, operating cash flow conversion remains strong at 92% of our EBITDA, underscoring the quality of earnings and disciplined working capital management. I'm pleased to announce that the board has approved an interim dividend of ₹5 per share, and this is in line with our dividend policy, reaffirming our strong performance, balance sheet strength, and commitment to deliver sustained value to our shareholders.

I'll move to the nine-month FY 2026 performance snapshot. For the nine months ended December FY 2026, our consolidated revenues stood at ₹11,413 crore, up 1% year-on-year.

EBITDA for nine months FY 2026 increased to ₹226 crore, a growth of 16% year-on-year, with margins expanding by 26 basis points to 1.98%. Adjusted PAT for nine-month period stood at ₹166 crore, up 13% year-on-year, with adjusted EPS at ₹11.1 per share, reflecting consistent profitability improvement.

I'll move to segment-wise financial performance now. Our general staffing continues to provide scale, stability, and strong cash flows even as margins remain sensitive to mix and seasonal factors.

Revenue for Q3 stood at ₹3,409 crore, accounting for approximately 86% of consolidated revenues, and segment EBITDA was ₹45 crore, with margins at 1.3%. Headcount remained largely stable at 4,70,774 associates, despite seasonal de-hiring in BFSI and CRT verticals.

Collect-and-pay coverage remained healthy at 76%, and our average DSO improved to 24 days, reflecting strong collections and credit discipline. Moving on to professional staffing, it delivered another strong quarter of margin-led growth, reinforcing its position as a key profitability driver for the company.

Our revenues stood at ₹230 crore and EBITDA increased to ₹29 crore, up 42% year-on-year. EBITDA margins expanded to 12.5%, and this is the highest for the segment.

Headcount increased to 6,934 associates, while GCC-led engagements accounted for 72% of the total headcount in professional staffing, supporting our margin sustainability. The improvement in margins reflects portfolio rationalization, our exit from low-margin contracts, and deeper penetration into higher-value digital and GCC roles.

Professional staffing now contributes approximately 30% of total operating EBITDA, despite being a relatively small part of our revenues. Moving on to overseas business, continued its margin expansion trajectory, supported by improved collections and regional diversification.

Our revenue stood at ₹290 crore, while EBITDA increased to ₹20 crore, up 26% year-on-year, and EBITDA margins crossed 7%, which is a key milestone for this segment. The Middle East delivered double-digit margins, while Malaysia and the Philippines showed strong improvements in both profitability and cash collections.

Singapore revenues were softer, but EBITDA improved sequentially due to cost optimization. The overseas business now contributes around 20% of operating EBITDA, reinforcing the increasing role of high-margin businesses in the overall portfolio.

From a portfolio perspective, approximately 50% of our total operating profitability now comes from high-margin business, which is roughly 14% of our revenue. Professional staffing and overseas business, this continued shift in mix combined with disciplined cost management is central to our margin expansion strategy.

Our focus remains on capital efficiency, liquidity discipline, and sustaining strong cash generation, even as we invest in technology and growth initiatives. I'll summarize for Q3 FY 2026: it is a strong quarter from a financial standpoint, marked by a new high in our quarterly EBITDA, continued margin expansion, strong adjusted profitability growth, and healthy cash conversions and balance sheet strength.

With that, I'll hand it over to Kushal.

Thank you, Neeraj. We are now open for the question-and-answers.

Over to you, moderator.

Hi. Thanks for the opportunity.

The first question is to get this clarification whether the pain in general staffing due to NBFC is all of that behind us, or there are still clients who are in that gray zone where they might have business with us and then at a subsequent date they might look to prune down? That is one.

Second, on the one-time benefits that are supposed to flow from the Pradhan Mantri Viksit Bharat Rozgar Yojana, those are supposed to start next June or July, right? By that time we should have had a lower base as such so that on a month-on-month basis we have higher headcount, and therefore the benefits flow to us.

Is this understanding correct? I just wanted your thoughts on these two things.

Thank you.

Thank you, Deep. I will ask Lohit to answer the questions on BFSI sector in general staffing as well as the Pradhan Mantri Viksit Yojana schemes.

Impacting our general staffing business.

Good morning, Deep. This is an important question.

I think last year in the quarter four, we had reported a one-time event where a BFSI customer had insourced a large set of volume on their own roles. As we looked at that particular event, one thing emerged very, very clearly to us as Quess Corp, that we have to have a portfolio diversification.

The first thing we did was we doubled down on our professional staffing as well as on our international, so that the value realization from these businesses and the margin-accretive businesses help us navigate any kind of a headwind that we may be faced with in a future event. Second, within the general staffing business itself, our business went and doubled down on multi-vertical strategy.

Today, on one side we have a volume business which is BFSI as well as CRT, on the other side we have a value business which is for our value-added services, our construction business, as well as our manufacturing business. This is a very planned strategy to ensure that a company of our size and scale is able to navigate with any form of headwinds that the market may give us.

I would also like to add that for our scale and size in the Indian economy, there will also be times of headwinds and tailwinds. As a management team, we will always be aligned to any of these eventualities, and we will build our business around both of these.

I will quickly shift to Pradhan Mantri Viksit Bharat Yojana that you just spoke about. Yes, it went live on 1st August 2025.

The first of the period would be considered as a base of the prior 12 months, and thereafter the growth that you achieve in the next six months will be modeled for the payments of the benefit. The second thing is in terms of net addition that the organization does.

As we spoke at the start of today's conference call, we are expecting, in spite of a flattish headcount for Q3 for reasons of both destocking post the festive season as well as the pause which got created in the six weeks of November and December regarding the labor code. We feel that with all the projects that we've signed both from a sales point of view as well as open mandate sourcing point of view, Q4 should give us steady headcount addition, and thereafter we should enter with steady headcount addition into the next financial year itself.

At the moment, have we modeled how much that would be? No, we haven't.

We will take it as that benefit comes and will report to the Street as and when that adds to our current margin trajectory.

Deep, I hope this answers your [clarification?] question?

Perfect. This is helpful.

Thanks a lot.

Thank you very much.

Thanks for the opportunity. A couple of questions.

First, on general staffing. Now I think broadly indicated NBFC-related things are largely behind, considering it was quarter four.

Are we getting confidence about, let's say, returning to double-digit in next couple of quarters from Y-o-Y perspective? That is question one.

When that growth returns, whether the composition of revenue would be favorable to margin trajectory? Because in last couple of quarters, because of business mix change, margin came under pressure for general staffing.

I just want to get sense about two aspects. One is returning to double digits.

Second thing is when we return, what would be the mix which can drive margin changes? That is question one.

Second question is about the new labor code related implications. Obviously, we have taken the hit in terms of the past performance kind of thing.

What would be the recurring impact we expect in the business? Whether the incremental cost which can come because of the PF, gratuity kind of thing, whether any of this we need to bear, or we would be able to pass on to clients?

Thank you. Thank you, Deep.

Thank you, Dipesh. I would ask Lohit to cover the questions on headcount growth and margins trajectory for general staffing.

Consequently, on the impact of new labor code implementation on our financials, I would ask Neeraj to step in. Over to you, Lohit.

Dipesh, thank you. As regards your conversation on the headcount trajectory for our general staffing business is concerned, as a management team we continue to model our sales, sourcing, and operational capability, and our technology back end to deliver a steady state 15,000 net addition quarter-on-quarter.

Like I just mentioned in the previous question as well, there will be headwinds and tailwinds which will come to a company of our size in an economy as diverse as India is concerned. Our business team in general staffing has built vertical BU heads in each of the verticals which are there.

As we sit in front of you in Q4, we find that Q4 has started on a much more positive trajectory than where we saw the month of November and December in Q3. We also see that both our legs in general staffing, that is the volume growth from large customers, as well as the value growth in some of the new businesses, will continue to remain.

As far as the margin trajectory is concerned, today our general staffing business and delivering the best margin in the industry at 1.4% is one of our lowest across our three businesses. In this business, we are looking to correct it to 1.5% to 1.6% in a near term and 1.8% in the medium to long term.

That's the trajectory that we would like to take from a margin perspective is concerned. On the labor code, I'll make one small, short comment, and then give it to Neeraj.

The ₹7 crore that you see is for the eventuality of all the code on wages restructuring for existing employees as they work at Quess Corp. This also is the change for gratuity calculation based on the new code on wages.

This factors for all such personnel that work with us today, and we have trued up the expectation for that. On an ongoing basis, our employees will see a slight shift in terms of the cost, and I'll give it to Neeraj.

As far as your question on customers are concerned, yes, in the speech also we called it out, 830 meetings have been done with clients where we have explained the impact of the labor code and the provisions to them, which will have to be modeled and factored by them in the purchase orders in coming times. Neeraj, I'll hand over to you.

Thank you, Lohit. Dipesh, there are two aspects that you have asked.

One is the impact of labor code in Q3. As basis the requirement of the law and as per the guidance note released by the institute, at Quess we have computed the impact of gratuity, leave encashment of the YTD.

That is the one-time exception clause that you see in the financials. Whatever is as per our contracts billable to the customers, that has basically been covered as part of our unbilled revenue.

The impact in our P&L is largely related to our core employees. That is part number one.

On the ongoing impact, please understand the PF and ESI and ongoing impact is basis the recalculation of the wages as part of the salary model. Given our internal structure, we don't expect a material impact basis our EBITDA base.

I would say a maximum of 1.5 to ₹2 crore we see as an ongoing impact because of our attrition rate, because of our existing structure of wages in the company. On the overall basis, I see it is a very immaterial impact on our margins as we move forward.

I hope, Dipesh, it answers your questions?

Thank you for taking my question. I have a couple of them.

My first question is on Middle East EBITDA margins. In your 2Q press release, you had indicated an EBITDA margin of 12.8% for the region.

In 3Q also you mentioned double-digit margins. However, if we look at staffing companies operating in Middle East, industry EBITDA margins are typically around 4%.

Could you please help us understand what are we doing differently that allows us to operate at materially higher margins in this region? Secondly, how sustainable are these margins over the medium to long term?

My second question is on the expected credit loss allowance of ₹120 crore that was provided on trade receivables in 4Q FY 2025. Could you share whether any recovery has been made from this data so far?

How we should feel about the potential write-backs or further recoveries going ahead? Thank you.

Thank you, Siddharth. For your question on Middle East and margins, I would ask Lohit to answer the question.

On the expected credit loss, I will ask Neeraj to answer it.

Hi, Siddharth. Yes, you're absolutely right.

We trade at double-digit margins in our Middle East book. We are between the 11.5% to 12.5% EBITDA margin that we've been delivering there.

Middle East for us is a long-term success story. This is not something which has been created in one, two quarters or one or two years.

Middle East has been growing on its base at a steady state of 25% to 30% year-on-year. We across Middle East also work and provide talent in multiple different segments.

We provide talent in retail, we provide talent in e-commerce, we provide talent in manufacturing and engineering, we also provide talent in banking sector. Last year, as part of our diversification strategy and our de-risking strategy, we looked at every BU of ours and every geography of ours, and we decided that we will double down on areas which do not exist for us, but can be a blue ocean for that location.

To give you an idea, in Middle East where we were heavily reliant on the general staffing across different segments, we added a layer of IT talent. Happy to report to you that as we speak, we've almost touched 100 associates in Middle East in high-margin IT business as well.

Total Middle East has a little over 2,000 book size. With that kind of a volume, our IDC cost also is well optimized and is kept on a fairly low side.

I think the comparison with low-margin businesses could possibly be because they do not have the scale that Quess has in some of these geographies, Middle East being one of those.

Over to Neeraj to answer your question on the expected credit loss of ₹120 crore that we have taken in Q4 FY 2025. Neeraj.

Thank you.

Thank you, Lohit. Siddharth, on the ECL provision that we took in Q4 FY 2025, this is largely for the skilling project that we are doing with the government.

Just to update you on the collection in Q3, while we are very closely working with the state governments on processing of these collections, just to update, there is a new process that has been instituted by RBI on the escrow account process. Because of that new process and both state governments and RBI and all of us are trying to work it around, it has unfortunately delayed the collections from Q3 to Q4.

We expect some of those collections to flow back in Q4. Just also wanted to mention that while these have been already provisioned, any collection that we do from here on is going to positively impact our numbers as we move forward.

Just to add a point there, if you recollect, in Q4 these were the discontinued businesses as part of the demerger that we had announced to the Street. We had taken an exceptional credit loss on that.

As committed, the effort is on. As and when the collection happens, we will report back to the Street.

Thanks. That was very helpful.

Hello. Am I audible?

Yes.

Okay. My question is regarding on the other expenses side.

On a Y-o-Y basis, there is 24, 25% of down in the other income side and for quarter 3 FY 2025, we already adjusted the numbers of Digitide Solutions and Blue Spring. Still there is a drop of 20, 25% which is majorly contributing to the profit side of around ₹55 crore.

Can you put some light on this thing? How much this other expenses part on a consolidated basis is contributed to each segments?

Hello?

Karan, hi. Okay.

First and foremost, what I understood is on the total indirect cost you are referring to is what I presume. Our average total cost per quarter is about ₹102 crore across group as part of the IDC.

There are few costs in the earlier if you are comparing year-on-year, there were demerger expenses which wouldn't recur in this current year. That's the sort of gap there.

Otherwise the run rate where we are today is about ₹102 crore of cost per quarter. That has been intact for last three quarters.

This is you are saying about the other expenses part? My question was on the other expenses part in the consolidated statement.

Which expense are you referring to actually?

Just a second. In a consolidated statement, if you see the other expenses, ₹137 crore, and on a Y-o-Y basis it is around ₹192 crore.

That's the drop of something around 20, 25%. That's what I'm asking, which is basically majorly contributing to the profit side of around ₹50-55 crore.

Can you put some light on what are these other expenses are?

Karan, your numbers we are not able to figure it out. Can we take this question offline?

You can drop me a mail and I'll answer these questions.

Okay.

Okay.

Fair enough. Yeah.

Thank you.

Hello? Hello?

Yes, sir.

Yes, Amit.

Thank you for the opportunity. Sir, my question is [unclear]

Sir, my question is what are the net additions top the headcounts in the quarter?

Headcount additions during the quarter, or you want guidance

for

the next quarter? Sir,

both actually. Both,

both. I'll give the question to Nitin to answer, our head of staffing.

Good afternoon. While as Lohit had explained already that because of some seasonal de-hiring and also multiple wage codes discussions where customers started taking stock of what is the current situation, the headcount impact was that.

However, going forward, we have a very strong pipeline, a very healthy open mandate 35,000-plus, as was mentioned, and also a strong pipeline. With that we're expecting to end the year on a new high, and we are expecting to do a net add in the coming quarter and end the year on a high in terms of volumes.

Also, the diversification strategy that Lohit mentioned and some of the investments that are being made, results of the same would be expected in the coming quarter. We are expecting while the current quarter has been flat, the next quarter will be a growth quarter for us.

Sir, in the previous concall, I think so we were guided 10 to 15,000 of headcount every year.

Yes. As it was mentioned by Lohit in the opening speech itself, on 21st November, the government actually introduced the wage codes with immediate implementation.

At that point of time, the customers, before adding new capacities, they actually started taking stock of what they already have and what will be the impact on their overall expenses before adding further headcounts. We have had more than 800 discussions with our customers on the wage code, and this guidance of 10 to 15,000 headcounts quarter-on-quarter will apply because we have a sourcing engine in place, we have a source pipeline in the place.

These discussions and these headcount additions have simply been deferred because of the wage code discussions in the coming quarter. That is the only comment that I would like to make on the quarter three number being flat.

Going forward, this growth will be there.

Sir, my second question was, is the 2% EBITDA margin the new normal?

Basically we had guided that we want to sustain at around 2%, but basis margin expansion in different verticals, we would guide you between 1.95 to 2.05% in the coming quarters. Guru, if you can just add.

Just to add, Amit, as Lohit alluded in his speech, when we started the year, the EBITDA contribution from general staffing was about 57%, and 43% was coming in from the other high-margin businesses. That product mix has changed.

As we end December quarter, we are now contributing 50% from general staffing and 50% coming in from international and professional staffing. That has helped us to keep our margin consistently to be around 2%, and we are able to do that for the last two quarters.

Now, are we going to focus on product mix and continue to work on the product mix better? Yes, that's definitely on our strategy and plan.

While general staffing would continue to grow, the mix is something which is important, and we will continue to work on it, and we should be able to sustain. However, we had guided the market exit of this year, we should be around 2%.

We are happy to see that we have been at least a quarter early reached there, we should be able to.

[unclear]

Sorry?

I appreciate you answering my questions. Thank you for that.

Thank you.

Hi. Good morning, and thanks for the opportunity.

I hope I'm audible.

Ankit, can you be a little louder? Please go ahead, Ankit.

My question is on the labor code implementation part. I heard that we see that as a catalyst for us, right?

I just also wanted to understand if we foresee any challenges like any sector or industry to have more employees on their own payroll rather than outsourcing it because of this labor code implementation?

If I can understand your question, you are asking whether Quess will face any challenges in any vertical as part of labor code implementation? Is that your question?

Yeah. If any vertical, like last year BFSI large client insourced the employee into the current payroll, right?

Is this new labor code implementation, do we see that to happen with other industries or verticals?

You're saying whether Quess will be impacted by any insourcing of any vertical due to labor code implementation? Is that your question?

Yes, that's right.

Okay. I'll ask Lohit to answer.

Okay. Ankit, thanks for the question.

I think the interim impact in Q3 has been because for all the customers, this is for entire India, by the way, this is a reset after 78 years. Under the labor code, there are laws which were made in 1924, 1947, 1948, 1950, 1974 have been reset and have been revised.

The second thing is that many of the industries did not exist when some of these laws were made, obviously it required a complete reset. What has happened in Q3 is that the clients have looked at that reset, and they are budgeting for it in terms of what would be the impact and what would be the changes.

To be very honest, under the laws today, whether you have them on your roles or whether you have them on a third-party roles, the cost, if any, whether on code of wages, whether on restructuring of wage, whether on gratuity payments and other implications, remains the same. Both ways, it has to be paid as per the new legislation.

You would also remember that Quess, being a listed company for almost 10 years now, follows every law in the book in the last 18 years of our existence and will continue to follow every law as and when the government comes out with it. Interim impact is for customers to know what will be the new cost for human capital.

Doesn't matter whether the human capital is on a third-party roles or whether it is on their direct roles. The medium- to long-term impact after this reset is over will be towards formalization and towards consolidation.

We feel that with the kind of understanding that Quess has on governance, on compliance, and being able to keep our customers always indemnified for the laws in India, there will be more and more clients who would be interested in working with Quess for our abilities, and we will be able to see more tailwinds over a period of time. I think I would also like to add one more point which probably with the Q3 results are already evident to everybody in India.

The speed with which Indian industry is taking labor codes and the seriousness with which Indian industry is taking labor code is phenomenal. In all of these hundreds of conversations, we have not had even one pushback asking us to help somebody restructure by saving cost.

Every conversation has been about what would be the cost, what are the changes, and how to ensure that it can be implemented at the earliest. I think that is the maturity of Indian industry, and it is the right time to call it out, and that should be beneficial long term.

Got it. Thanks for the comprehensive answers, sir.

Hello, am I audible?

Yes.

Hello.

Go ahead, Akshay.

I had a question regarding the professional staffing. Right now it is around single digit as a percentage of revenue.

Going forward, what percentage can we expect from this segment? Because the margins are in double digits over there.

Just wanted to know about that.

Thank you for the question, Akshay. Before I hand over to my leader for professional staffing, Kapil Joshi, I would just like to make one highlight and a point here.

This entire strategy of margin expansion and value-accretive verticalization started for us nearly 5 years ago in this business. We were doubling down from a EBITDA margin percentage of 4.5% to 5%, and we were clearly looking out to a market where we work on high skills, niche skills, and digital technology skills.

As an organization, in the last 5 years we've ensured that we walk that path, and the resultant is visible in front of all of you, which is today above 12%. Now I'll hand over to Kapil on how does he see the market opportunity hereafter to grow and expand even further.

Akshay. Thank you for the question, and yes, we are cognizant about top-line growth, revenue growth, which is currently in single digit.

Going forward, we expect it to be much better. If you see our sales pipeline, we are actually focusing on acquiring the good logo.

Far, we see that we have acquired 48 new logo in the last quarter, October, November, December along. When hiring are actually subdued, we acquired 18 new logo.

I think in next 12 months, this 48 logo what we have acquired will have a headcount build-up, and that too in a niche super-niche segment where margins are better. Okay.

We expect H1 is anyway is good for our industry, IT industry. At least for next two quarter, we expect the growth will be a top-line-led growth, driven by the headcount addition.

Akshay,

does that answer your question?

Yeah. Thank you so much.

Thanks for the follow-up opportunity. Two questions.

Just want to get sense about how one should look payout. Any ratio we have in mind in terms of the payout ratio?

Second question is about the client concentration. I think this time presentation doesn't include general staffing client concentration.

Can you provide some sense how that is shaping up? Thank you.

Dipesh, just a clarification. When you refer to payout ratio, is it

dividend payout?

Dividend payout, okay.

Yeah. Yes.

Dipesh, we have a dividend payout policy, and as per the policy, our payout ratio is 75%, up to 75%. Up to

75% of our free cash flow

over a block of 3 years. Dipesh, does that answer your question on dividend payout?

On your question on sector-wise concentration on general staffing, I would ask Lohit to answer the question. Yeah.

Yes, in general staffing, our larger businesses continue to be CRT, followed by BFSI, followed by manufacturing, telecom, FMCG, FMCD, e-commerce, logistics, healthcare, supply chain, and government. This is a clearly verticalized strategy which was started about 18 months ago.

While we started this strategy, we created a strategy number two, which was on the value-accretiveness of the business, that is where VAS, manufacturing, as well as currently construction stands for us. If you look at one of the principles that our business has been following is steady state between 280 to 300 new customer logos just in the general staffing business year-on-year for the last couple of years.

We've already done about 222 logos this year as well from enterprise customers just in general staffing. These logos take about 3 to 6 months to ramp up and become large scale for us.

Our concentration of revenues or concentration of business in terms of headcount for the top 10 customers is close to about 40%. However, no customer of ours is in double digits contribution today for a general staffing business.

If we were to take it at a Quess Corp level, it would even be lower because 15% to 16% of Quess Corp's [unclear]. If that gives you a glimpse, there is no one major item which creates the book for us.

Understood. Thank you.

Thank you, Dipesh.

Hi, sir. Can you please help me understand why our margins are currently around 2%, whereas they used to be around 4 to 5% historically?

Has there been a structural change in the industry?

When you're looking at margins, then they were looking at consolidated Quess before demerger. Now the margins which we are reflecting over here in the range of 2% are post demerger for Quess Corp itself.

If you look at it, as you look at the history of our company, we underwent a demerger, which was since 1st April 2024. If you look at our financials, Blue Spring and Digitide are not part of the company.

Prior to that, when you're looking at margins, they were as a consolidated Quess.

Standalone margins, they were higher, I think. If you can correct me if the word staffing margins were around 2% itself around, say, 5 years back or pre-COVID, or has there been a general trend of margins declining?

Okay. Just to add, so as Kushal said, it's a demerged balance sheet now, and it's only workforce business that we have, of which general staffing delivers about 1.4 to 1.5% EBITDA margin, professional staffing delivers about 12%, and international is just about 7%.

Way back the question that you're asking is, if I were to really go back to the previous business mix, which we have been calling repeatedly is that the skill development when business was part of workforce, and we had another entity which was Monster, which was part of workforce, which was outside India where we were operating in US and Canada. With all of those business with high EBITDA margins, we were averaging around 4, 4.5%, but that businesses have been discontinued and Monster as part of demerger has moved into Digitide, it's non-comparable.

We would be happy to take this question if you have anything specifically, and you can reach out Kushal, we can share. The product mix in itself has changed, and there are set of businesses that has been discontinued, which are no more part of workforce.

Hence steady state if you look at, when we started the year, about 1.8% EBITDA to about 2% EBITDA is where we were guiding the market, and we are in line to that.

Also, to add to that, in the last five quarters, our EBITDA margin has expanded from 1.6% to currently at 2.03%. If you look at it, there's been a 47 basis point improvement in our EBITDA margin in the last five quarters of our operations of Quess Corp.

Got it, sir. My second question would be around our current receivables over 6 months.

Given that we took an ECL of about 100 to 150 CR in last year, have we taken any steps to strengthen our processes or strengthen your collections?

I would ask Neeraj to answer this question on strengthening our financial controls and processes.

Gunit, first thing, I think we already answered this question previously. This one-time ECL that we took in Q4 of last year was relating to our skilling business.

While we have taken the provision, we are still working very closely with the customers and the government. Because of some RBI process, the collection on that part is a bit delayed.

Just to give you an idea of the improvement that we have done on our DSO part, in general staffing business, which is our larger business, we have brought down the DSO to 24 days. That is a significant improvement that we have made.

I think we are making significant improvement on our collections. Our EBITDA to OCF is at a healthy 92%.

We are on the right path, and we'll keep the momentum as we move into Q4.

Sir, what are trade receivables over 6 months currently?

Sorry?

Trade receivables over 6 months.

If you look at our average DSOs, this not being a balance sheet quarter, we're not reporting it. On general staffing, the average DSO is around 24 days, with AR at 14 days and UBR at 10 days.

All right, sir. Got it.

Thank you very much.

General staffing contributes to 86% of our revenue. I hope this answers your questions.

Hi. Thanks for the opportunity.

Wanted to ask you about your professional staffing segment. The margins are continuously improving, from 10% in Q1, then to 12% in Q2, and now 12.5%.

Just wanted to understand, what are the sustainable margins like? Would it be in the range of 11 to 12%, or should we see it as above 12% now?

Similarly for your overseas business as well, the margins have shot up to 7%. How should we see it going forward?

Thank you, Samay, for your question. I would ask Kapil to answer your question on the margins for our professional staffing business.

Overseas business, I would ask Lohit to chip in. Overall, if you look at the overseas business which has crossed 7%, it has been a staggered and implemented strategy and trying to improve profitability, diversification across our regions, which has reflected in this quarter's performance for overseas business.

Over to you, Kapil, for professional staffing.

Professional staffing, like Lohit mentioned in the initial call, it was conscious efforts from us for last 3 to 5 years to change our portfolio and product mix, client mix. We have moved from entry-level, L1, L2 support role to niche, super-niche area where we support our clients.

Simultaneously in last 3 years, revenue from the GCC has also improved significantly, where our margins are better. I think margin going forward should be in this range, and like I mentioned in my last comment, we expect we should see the top-line growth going forward.

Basically, above 12%, is my understanding right, or will it be between 11 to 12%?

Yes, you can assume that it will be range-bound between 11 to 12%.

For the overseas business?

Overseas, we've been steady state between 6.5% to 7%, we would continue to keep guiding for the same as well. However, nothing will stop us from looking at, like I mentioned, opportunities out there and enhancing our margin wherever to the extent possible.

I also wanted to add one point. As far as a workforce management or a staffing company is concerned, there are a few ways to model an organization.

What is the EBITDA to OCF conversion? What is the free cash that is generated?

What is the gross earning to net earning ratio, which for Quess is above 50% already? What is the margin earned per person?

What is the ROE, which will in the case of Quess this year should be at 20% as we end? How much is the free cash that the company generates on a year-on-year basis?

I think these are the principles at which a workforce management in a staffing company should be calculated towards.

Right. Another question regarding your contingent liability.

I see for the direct tax it's remained same as what it was in FY 2025 at ₹296 crore. Could you just share an update on your indirect tax contingent liability regarding your GST contingent liability?

It was ₹372 crore in FY 2025. Could you share some color from the demand update?

Is it still the same or has it been any change in that? No,

there is no material movement on the GST front.

Okay. Regarding your tax expense, I see you have got a tax benefit of ₹4 crore in this quarter versus a tax expense of ₹6 crore last quarter.

How should we see the tax rate, effective tax rate, going forward?

Yeah. You're right.

This was because of the labor code impact and the deferred tax asset that we have booked in the books. Going forward, we will continue to guide on the 10% ETR range, given the model of our business.

Okay. Thanks.

Thanks so much for answering. That's it from my end.

Thank you.

Thank you very much for joining us today. As we look ahead, our ambition is to scale responsibly while continuing to improve the quality and sustainability of our earnings.

In Q4, we are focused on delivering a net headcount addition exceeding 15,000, building on market leadership and execution strength. In professional staffing, we are working towards exiting the quarter with a ₹30 crore EBITDA run rate on a quarterly basis, reflecting the steady shift towards higher-value, higher-margin work.

We see a meaningful opportunity to further increase the contribution of our professional and overseas business to overall profitability, while maintaining strong cash generation and balance sheet discipline. Underpinning all of this is our continued investment in AI-led transformation across hiring, collections, back-end operations, which we believe will be the key drivers of productivity, resilience, and long-term value creation.

At a broader level, our focus is on consistent growth with strong fiscal discipline. We have a clear ambition to scale to 1 million associates over the next 4 to 5 years worldwide, with high cash flow generation and a sustainable dividend policy as guardrails that must be met.

We will continue to invest in higher-margin businesses across India and overseas, anchored on our three core pillars: employees, customers, and shareholders. Thanks again for joining us for the Q3 earnings call.

Your question and feedback has always been valuable. We appreciate your continued interest and support, and I sincerely look forward to catching up with you again.

Thank you.