Quess Corp Limited (QUESS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Quess Corp Q1 FY '27 Earnings Conference Call hosted by IIFL Capital Services Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Siddharth Zabak from IIFL Capital Services Limited. Thank you, and over to you, sir.

Thank you. Ladies and gentlemen, good morning, and thank you for joining us on the post Q1 FY '27 Results Conference Call of 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. Lohit Bhatia, Executive Director and Group CEO; Mr. Neeraj Jain, CFO; Mr. Kushal Maheshwari, Head of Investor Relations; 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 the 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 Q1 FY '27 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 policy. All forward-looking statements are subject to economic growth or other risks faced by the company. Please refer to Slide #2 of the investor presentation for the safe harbor clause. With that safe harbor clause, I will now hand over the call to our ED and Group CEO, Mr. Lohit Bhatia, for his opening statements. Over to you, Lohit.

Thank you, Kushal. Good morning, everyone, and thank you for joining us for Quess Corp's Q1 FY '27 Earnings Call. We are pleased to start FY '27 on a strong note with broad-based growth and improvements in the quality of our earnings. For the quarter 1 FY '27, we delivered a consolidated revenue of INR 4,182 crores, reflecting a 15% year-on-year growth, while a 7% quarter-on-quarter growth. The EBITDA during this quarter came in at INR 85 crores. This is a 21% year-on-year growth with a margin at 2.02%. PAT stood at INR 82 crores, growing at 61% year-on-year and 28% quarter-on-quarter with an EPS of INR 5.5, also up 61% year-on-year. During the quarter, due to the implementation of the new labor code resulted in a onetime revenue impact of INR 176 crores as well. During this quarter, we received income tax refunds for the past financial years, including interest of INR 261 crores, which contributed to higher other income for the period. Importantly, we remain a INR0 debt company as of June 2026 with a healthy net cash position, reflecting the continued strength and discipline of our balance sheet. Separately, on the approval of the final dividend in the ensuing and upcoming AGM to be held on the 25th August 2026, we will be paying a final dividend for the last financial year of INR 3 per share, staying true to our commitment of rewarding our shareholders at every step of the way. Overall, the business performance has been broad-based growth across every segment, and I'll just briefly talk about that. Q1 FY '27 reflects continued momentum across our portfolio. With all 3 core segments delivering double-digit revenue growth on a year-on-year basis, we ended the quarter with a head count of approximately 482,214 associates, which is up 4.5% year-on-year, reinforcing our position as India's largest domestic staffing platform. In our General Staffing business, which has seen resilient growth despite the market environment, General Staffing continued to demonstrate scale leadership and execution discipline delivery. Revenue stood at INR 3,596 crores, which is up 15% year-on-year, 8% quarter-on-quarter. The EBITDA for the quarter is at INR 51 crores, up 12% Y-o-Y, though sequentially down 2%. Head count stood at 469,000 with an addition of 3,800-plus associates in a challenging market environment. We, however, added 86 new contracts during this quarter as well in our General Staffing business. The DSO remains tight with 15 days AR, while overall 28 days, including the UBR. The growth was led by our CRT, manufacturing and allied verticals, while the BFSI saw a marginal decline. We continued to focus on higher value segments such as construction, manufacturing and [ VAS ], supported by the investment in technology and AI-led sourcing and productivity initiatives. Moving on to our Professional Staffing vertical, sustained high-quality growth. The Professional Staffing delivered another quarter of profitable GCC-led growth. The revenue at INR 252 crores is up 3% year-on-year and up 9% quarter-on-quarter. The EBITDA during this quarter has come in at INR 28 crores, which is up 12% year-on-year with a margin of 11%. GCCs now contribute 71% of head count and 68% of revenue, reflecting our continued positioning in high-value roles. Head count at the quarter end stood at 7,129, up 7% year-on-year. We added 36 new contracts in our Professional Staffing platform during the quarter with an open mandate of 1,100 positions, primarily in niche and high-value roles. Our gross margin to EBITDA conversion remained a healthy 50% with double-digit EBITDA margins even after absorbing the annual merit cycles and the payouts, which are typically for the end of the year, underscoring the structural business of -- structural strength of this business of ours. Overseas Business has been consistent with diversified growth. Our Overseas Business continued to deliver consistent double-digit growth across geographies. Revenue stood at INR 333 crores, up 17% year-on-year, broadly flat quarter-on-quarter. EBITDA grew to INR 21 crores, up 17% year-on-year with margins at 6.2%. We added 37 new logos during this quarter with double-digit growth in both revenue as well as EBITDA. The key highlights across some of our geographies. Singapore General Staffing business alone added 17 new contracts and 37 local nationals to their head count. Malaysia delivered 55% year-on-year revenue growth, scaling to 873 head count with an EBITDA margin of 4.1%. Middle East delivered 12% EBITDA margin with 27% revenue growth and 18% EBITDA growth year-on-year. Philippines recorded 17% year-on-year revenue growth with a 10% net margin. EBITDA margins remained stable despite the currency fluctuation, and our international portfolio continues to be well diversified across Southeast Asia, Singapore, Middle East and rest of the world. Digital platforms and Quess 2.0, building for a dollar-denominated and a higher-margin growth. Our digital platform businesses remain in the investment phase as we continue to build our blue-collar jobs market as well as AI-driven recruitment and workforce solutions. We continue to make strong progress on Quess 2.0, repositioning our current volume engine towards a higher margin, value-accretive growth in the years to come. We are building a partner-led capital-light talent corridors across 5 focus segments: health care, technology, MEP and civil, hospitality and allied and finance and professional. Our Japan corridor is signed and in execution. Europe, particularly the Nordics, is in advanced stages of discussion. Israel as well continues to be in discussion and North America is at early stages of exploration. Over the next 3 to 4 years, we aspire to have 20% to 25% revenues coming from higher-margin businesses, changing the underlining composition of our company as well as the margin profile and trajectory. People and ESG. I'm proud to share that Quess has been certified as a Great Place to Work for seventh consecutive year, ranking 19th among India's Best Workplaces in 2025. We were also certified Great Place to Work in Singapore for third consecutive year and for the first time in UAE. During this quarter, we were also recognized as a CMMI Level 3 certified organization. We also were ranked 188 in Fortune 500 list and 175th in the ET500 list and certified as a leadership factory for India for the years 2026, 2028. Before I close, let me leave you with 3 thoughts as we look ahead into the rest of H1 of FY '27. First, the festive season is coming up, and we are seeing demand from across our client base, which gives us confidence heading into the seasonally strongest quarter, both by sourcing and sales. Second, we have laid a strong foundation to capture this growth across head count and contracts, putting us in a good position to convert demand into revenue as it comes through. And third, taking these into consideration together, building on a healthy H1 performance, along with our Professional Staffing and international business aiding in margin growth as well. With that, I will now hand over to our Group CFO, Neeraj, to walk you through the financials in more detail.

Thank you, Lohit. Good morning, everyone, and thank you for joining us for Quess Corp Q1 FY '27 Earnings Call. I will begin with our headline financial performance for the quarter, followed by a brief segment-wise review. Starting with financial highlights for quarter 1 FY '27. Q1 FY '27 has been a quarter of broad-based revenue growth with profitability improvement and meaningful strengthening of the balance sheet, giving us a strong start to the financial year. Growth was visible across all 3 of our core segments and both PBT and PAT grew considerably faster than revenue, reflecting genuine operating leverage layered on top of a couple of one-off items that I will walk you through. Consolidated revenue for the quarter stood at INR 4,182 crores, up 15% year-on-year and 7% quarter-on-quarter, led by General Staffing, which grew 15% Y-o-Y and 8% quarter-on-quarter with a meaningful contribution from a onetime revenue impact of INR 176 crores relating to the new labor code implementation. Professional Staffing and Overseas Business grew a further 3% and 17% Y-o-Y, respectively, and total head count rose to approximately 482,214, which is up 4.5% year-on-year. EBITDA for the quarter came in at INR 85 crores, up 21% year-on-year, so down 2% quarter-on-quarter with margin at 2.02%, an expansion of 11 basis points on a year-on-year basis. While a sequential moderation of 20 basis points was largely a function of the annual merit cycle and variable pay reset that typically flow through in the first quarter, along with a 11 basis point contraction in margin in Q1 over Q4 FY '26 due to the onetime pass-through revenue of INR 176 crores for the labor code. Other income for the quarter was higher at INR 26 crores compared to INR 6 crores in Q4 FY '26, largely attributable to the income tax refund of INR 261 crores, which includes interest of INR 22 crores that was received during the quarter the interest component of which flow through other income. This refund pertains to prior years and represents a meaningful onetime cash and balance sheet positive impact at Quess. As a result, PBT for the quarter grew to INR 86 crores, up 28% quarter-on-quarter and 64% year-on-year and reported PAT stood at INR 82 crores, up 28% quarter-on-quarter and 61% year-on-year with diluted EPS at INR 5.5, which is also up 61% year-on-year. I'll move to the segment-wise financial performance now. General Staffing continues to be the scale engine of the business, providing stability, cash generation and a broad operating base. Revenue of INR 3,596 crores, which is up 15% Y-o-Y and 8% quarter-on-quarter, aided by onetime INR 176 crore labor cost impact. EBITDA of INR 51 crores, which is up 12% Y-o-Y, also down 2% on a sequential basis on account of the annual merit cycle. The net head count addition of 3,800 with 86 new contracts added during the quarter. DSO remained tightly controlled with AR stable at 15 days, reflecting continued collections discipline in General Staffing. GS has over 37,000 open mandates at quarter end, along with a strong sales pipeline as we move into Q2. Moving on to Professional Staffing. Professional Staffing remains a key structural driver of margin expansion anchored in GCC and high-value technology roles. Revenue of INR 252 crores, up 3% Y-o-Y and 9% quarter-on-quarter. EBITDA of INR 28 crores, up 12% Y-o-Y with margins holding at approximately 11%. The GCC engagements now account for 71% of head count and 68% of revenue in this segment with 36 new contracts added and open mandate pipeline of 1,100-plus roles. The sequential dip in EBITDA reflects the impact of the annual merit cycle and variable pay reset that typically lands in the first quarter and which we have historically seen normalize as the year progresses. Even so our gross margin to EBITDA conversion in this business remained above 50%, and we sustained double-digit EBITDA margins. Our internal priority remains to scale Professional Staffing to a INR 30 crore quarterly EBITDA run rate. I'll move to Overseas Business now. The business delivered another quarter of consistent double-digit growth with stable margins supported by diversification across Singapore, Middle East and rest of the world. Revenues of INR 333 crores, up 17% Y-o-Y with EBITDA of INR 21 crores, also up 17% Y-o-Y at a margin of approximately 6.2%. Segment EBITDA stood at INR 21 crores, up 17% year-on-year with margin at approximately 6.2%. We also added 37 new logos during the quarter with growth well diversified across Singapore, Middle East and rest of the world. To summarize, quarter 1 FY '27 reflects broad-based double-digit revenue growth across all 3 core segments, a sharp improvement in PAT and EPS, a strong INR0 debt balance sheet and disciplined capital allocation policy. We remain confident that a resilient General Staffing base, a margin-accretive Professional Staffing and overseas portfolio and continued balance sheet discipline position us well to deliver sustainable high-quality earnings growth throughout FY '27. With that, I'll hand it back to the moderator for Q&A.

[Operator Instructions] The first question from the line of Amit Chandra from HDFC Securities.

Sir, my first question is on the General Staffing segment. Obviously, we are seeing some strong growth there, which is largely driven by the consumer and the manufacturing verticals. But BFSI has been a laggard, and I know there are industry changes that are happening in the BFSI vertical. So if you can just give some color in terms of how to see the BFSI in terms of revival. And also in terms of manufacturing, which is largely a more unorganized sector, and we are seeing some good traction there, so what are the challenges that we are seeing in terms of manufacturing? And also the markup there in the manufacturing are higher versus BFSI. So is it that as we scale manufacturing, we can see higher margins in the General Staffing business? So that is one part. And also in terms of the overall portfolio mix, what part of the overall portfolio would be fixed markup versus variable markup? And in terms of newer engagements, are we seeing a shift towards more variable markup model?

Thank you, Amit, for your question. I would ask Lohit to give his views followed by Nitin.

Thanks for the question. If you really look at it, you're right, the growth in this quarter in General Staffing has come primarily from manufacturing as well as the repeat of CRT or consumer retail and telecommunications for us. The consumer space has been a little lagging in the last few quarters, but this was a very busy -- last year was a very busy policy year. We are starting to see definitely growth coming back in that. Together, these 2 have not just given us growth, but they are definitely giving us a better growth for the rest of the year because 86 new logos and contracts have been signed by us. And we feel that as these fructify and mature in second quarter, there would be additional head count, which will also come from each of these customers that have already been added. To your point on BFSI, I'd like to divide it into 2, the core banking sector and the rest of the NBFC and other fintechs and other allocations. As you know, there is a strong regulatory headwind in our industry, what can and cannot be outsourced. As an organization, for the last couple of quarters, we have been dabbling with that, but focused on what can be outsourced. Opportunity-wise, opportunity in India with housing finance companies, NBFCs and other fintech companies continues to remain large, though the scale of each of this may be in a few hundreds. So while our team signs more and more relationships and will build on those relationships, obviously, it will take some time for it to come back to deliver on that. Let me just bring notice to 2 facts. First, Quess is no longer a volume organization. And I think consistently for 5 quarters in a row, we have shown that we are a volume and a value company. Today, only 50% of our profit pool comes from the General Staffing business, while 50% comes from professional and international, which are the higher margins. Within each of our platforms, including in General Staffing, we have a very focused activity execution and narrative towards the higher-margin businesses. These are the value-added services, the manufacturing portfolio as well as the construction portfolio. You did ask a question that does manufacturing give higher PAPM. Yes, they do. If in the normal trend of General Staffing PAPM is between the 600 to 700 at a broad level, in the manufacturing space, the same could be anywhere between 800 to 1,100. But from a gross margin perspective, in consumer, it could be 2% to 3% gross margin, whereas in manufacturing, it would be 5% or 6% gross margin. And it is not easy to deliver on manufacturing because it requires intensity in sourcing, which is something that Quess has built in the last 18, 19 years. It requires infrastructure, which Quess has built in the last 18 years plus with 65 premises of our own. It requires technology intervention and recruitment and sourcing, which again, something that Quess has built and is continuing to build this year as well. I believe on fixed and variable -- within the General Staffing space, fixed and variable, I'll just come back and --70-30. So 70% of the contracts will be fixed, about 30% of the contracts will be variable. In this quarter, around 38% of the contracts have come with variable. But these are obviously new contracts for them to become large and then benefit from the variabilization will take some time.

Okay. And obviously, the focus is shifting towards higher-margin segments and the mix is becoming healthy for us. In terms of the IT staffing, Professional Staffing segment, obviously, there has been a growth coming in there. But because we are becoming more GCC heavy there, so are we seeing some signs of normalization in terms of GCC hiring? And can there be a shift between, say, some slowdown in GCC versus some pickup in the IT services traditional hiring there in the IT staffing? And also in terms of margins, you mentioned about you want to be in the range of INR 30 crores quarterly EBITDA kind of range. So that is roughly 12% kind of a number, 11.5% to 12%. So is it the kind of EBITDA for the IT staffing that we can see for the coming quarters? And a connected question on the EBITDA part for General Staffing. Obviously, in this quarter, there has been an impact because of the INR 176 crore number. So ex of that 1.5% is the EBITDA margin for General Staffing. So that is a steady-state margin that we can assume or there are some investments that are required for the volume growth to sustain?

Okay. Thank you. Lots of questions in that actually. So first, we'll pick up quickly on the GCC-heavy story. From our book point of view, 68% comes from GCC in terms of revenue and about 72% comes in terms of head count. However, our team is extremely bullish on further growth in GCC for a couple of reasons. India has about 2,407 GCCs as we speak. As of date, we have been able to capture only 10% of them. So there is a big blue ocean out there for us to be able to capture. We have added geographical intensity. We've added practice-based intensity, and that will continue to yield more business to us. India itself as a nation is attracting anywhere between 250 to 300 GCCs every year. So yes, some GCCs may mature. And once they mature, there could be a hiring slowdown in that particular GCC. However, we are confident that with so many GCCs out there yet to be captured by Quess, the new GCCs which are coming and our international corridors, one of which has already gone live, which is the Japanese corridor, we will definitely be able to capture a greater part of the market. I'll stay with Professional Staffing and answer the margin profile a bit and then move to GS. As far as our margin profile in Professional Staffing is concerned, you will see that last financial year, we started the quarter at about 10% and we gradually towards the end of the year, exited over 12%. Yet we had guided for an 11% to 12% margin profile in this portfolio. I will continue to keep guiding for 11% to 12% in this portfolio as well, while every effort will be made by our leadership team in the Professional Staffing stable to do better than that. As far as our General Staffing EBITDA is concerned, yes, you're absolutely right. INR 176 crores of a onetime pass-through entry that Neeraj explained on account of labor code is there, which has not yielded bottom line and hence, the correction of 10 basis points. The second correction during this part of the quarter, Quess religiously does the merit cycle on the 1st of April of every new financial year, and that has also been baked into these results itself. So if you normalize for this, we would have been a little over 1.5%. There are multiple moving parts in General Staffing. While on one side, the flat fee business can erode margin on a percentage basis. Everything that our team is doing from AI investments, sourcing and platform investments and the output of that should start yielding from this financial year, along with our higher-margin portfolio within General Staffing itself. We should be confidently producing similar or better results.

We take the next question from the line [Zakir Nair from Nazir Investments ].

Sir, congratulations to you and the team for such a healthy number. Sir, you've given a very strong statement that Quess aspires to be a 1 million organization by 2030, which will get it amongst the world's largest private employers. What direction would you set for this, in terms of geography, in terms of industrial versus GC versus General Staffing I would want a broad guidance on this, [ strength ], sir.

Sure. Thank you. As you remember that when we were demerging about a year ago, for all the 3 organizations, we had given stated goals. For Quess, the stated goal was to become world's #1 from the then rank of fourth and fifth and today, we rank the third and the fourth as far as volume is concerned. For us to become the world #1, technically, we need only 125,000 more head count. And at a point somewhere between 6 lakh and 6.3 lakh workforce, all of us as proud Indians will see an organization, which is the world's largest come out of India as far as workforce is concerned. Our North Star continues to be 1 million that we would eventually want to see. And this is based on the fact that India has demographic dividend, which is going to be positive for our country, at least for next 18 years. So in this is, is baked in the fact that India has a demographic dividend. To your question, does this require us to do disproportionate amount of investment and operations in other countries, I would slightly differ from there. In the 5 corridors, and I would draw everybody's attention to the last 3 slides on future strategy in our investor deck this time. In the future of Quess, it is a CapEx-light and a partner-led model in 5 territories and geographies that we have called out, that is Far East and Japan, Israel and U.K., Germany, Nordics, Canada and U.S. The intention is not to have an operating staffing company in these countries because each of these countries have turned demographic negative more than 15 or 20 or 25 years ago. So supply side constraints are shrinking those countries. What we intend is from these countries, there is disproportionate amount of business coming to India on both talent and technology. That is what is converting into the GCC strength of India. We want to build on that strength through our partners. The second thing we want to do is we want to build a reverse skilled talent mobility for the international markets into these countries. And again, in my speech also, we had alluded to the 4 tracks which we are looking at, which is health care, MEP, technology, retail and hospitality. So it is a very CapEx-light and it is not about starting new staffing company in these countries, but it's using India's global power of technology and talent for fulfilling that journey.

In the past 2 years, the geographical disturbances which have happened and see most of the growth countries we are aspiring to be also have border issues, I would say, visa type of issues. So do you think you'll be able to successfully surmount these and things will come back to normal in a couple of years?

I'm sorry, that question was not clear. Could you just please repeat?

Overseas growth, do you think it will fix, visa kind of issues, sir?

Okay. Visa issues. Okay. Got it. Thank you. So if you overall look at Quess's portfolio in the 19th year, about 7% of our revenue comes dollar-denominated from countries outside of India, 93% comes in Indian rupees. We are obviously looking at higher margin, higher-accretive business and also dollar-denominated business or multicurrency-denominated businesses, which is what it will give us. I would also like to draw your attention to the fact that the Indian government is relentlessly working to do FTAs with multiple nations, some of which have already been announced. Europe has been announced and should fructify in the calendar of 2027. U.S.A., hopefully, the FTA should happen soon. In each of these FTAs, if you notice, there is one full chapter on embedded skilled mobility that government of India is signing with all of these countries. Indian nationals have always done extremely well when it comes to Middle East for blue and gray collar and when it comes to the North American market for the technology talent. We see no reason why those markets should not open up in a bigger way to solve their own internal crisis in health care, in technology, in mechanical, electrical and plumbing. As Quess, we want to be a management which is looking world over at opportunities that can exist. We will be ready with those opportunities as and when the corridors open up. To your point, the day the visas are ready, Quess should be there.

We take the next question from the line of Dipesh Mehta from Emkay Global.

Congrats for strong execution. First question is on the GS associate head count growth. In quarter 1, it grew roughly around 5%, 5.5%. How one should look, let's say, associate growth in General Staffing business, considering some of the challenges which you highlighted in BFSI, while you see growth opportunity in some of the other verticals? Second question related to your ambition about, let's say, from 0.5 million associates to 1 million kind of associate by '30, in maybe roughly 5 years kind of time period. What would be the role of M&A in, let's say, achieving that ambition? And if, let's say, M&A is one of the key elements in overall strategy, can you give growth thought process around it? Third question is on the new labor code. We have seen some impact, roughly around INR 175-odd crores impact which we have seen. Do you expect it to continuing at least from base-quarter perspective in this year when one look Y-o-Y perspective? And if yes, whether this 10 bps is likely to be a headwind when you look full-year margin in the business? If you can answer 3, then I have 1 or 2 follow-ups.

Dipesh, thank you. As far as our General Staffing associate head count is concerned, in the last couple of calls as well, we have said that as an organization, while the investments, the technology, the geographical presence that we've created for ourselves can definitely do a lot more, but we are looking at each year to perform at between 10% to 11% of head count growth, which yields anywhere between 40,000 to 50,000 head count. In the first quarter, we've done about 5,000 of that, but my leaders and the entire team in General Staffing is geared up for the upcoming season. And if you want, we can talk a little more detail about that, and Nitin can throw some light. As far as our ambition on the global scale is concerned, that's what I was answering in the previous question as well. This was a stated goal that we had, and we continue to keep it as our North Star. However, what we are more bullish about is the margin-accretive business and taking Quess towards both a volume and a value growth trajectory. It is not an either or for Quess anymore. It has not been for the last couple of quarters. And for the next few years, the focus will be more on value-accretive businesses besides what we do on volume. As far as your question on M&A is concerned, no, nothing at the moment is there. Like I mentioned, these are capital-light conversations in corridors. We are looking at a partnership mechanism, one of which was announced in the month of June and has gone live, which is with the Japanese corridor with our partners. We will continue to look at it in that way. And whenever and if any opportunity comes, which is value accretive to Quess at the right valuation, I'm sure we'll keep all our investors and the community informed about the same. I will hand over to Neeraj on the specific question on the new labor code and what could be the further during the financial year, if any.

Thank you, Lohit. So to answer the question on labor code, till Q1 -- YTD Q1, I think we have covered almost 68% of our customers. And from an impact perspective, it actually doesn't impact our profitability in the income statement. So it is -- as soon as our customers make a choice between FTE and permanent model, they confirm to us and basis that we book the liability. So it is just a pass-through for us. And as I said, till Q1, we have already covered almost 68% of our gamut. We believe -- and we are actively in touch with all our customers. We believe by end of Q2 and maybe early Q3, we should be able to cover the entire set of customers' request. And from a liability perspective, we'll be able to fully book.

I would pass it on to Nitin if he has more color to add to the General Staffing business.

Yes. I just wanted to speak about General Staffing and where we are at this point of time and the base at which we are sitting. As Lohit has mentioned that we have signed -- I would say there are 3 factors which can impact the volumes in quarter 2 and because you were asking for an outlook. Factor number one is that we have signed 86 new accounts. And all these accounts are expected to grow in Q2 and build volumes. The second important factor is that the festive season is coming, and we expect a good festive season. At this point of time, we are sitting on an open sourcing book of 37,000 people. On top of that, there are new pipelines that we are building, and those pipelines are healthy as well. Based on these 3 factors, we are expecting a strong Q2 in our business.

Understand. Just a couple of follow-ups. First on the number side, you said 68% of the customer covered by Q1. So let's say, 68% is covered, so do you expect, let's say, this INR 176-odd crores is a recurring number at least from Y-o-Y perspective? I understand Q-o-Q may not recur, but INR 176 crores for this 68% customer will recur in quarter 2, quarter 3, quarter 4 or no?

So see, the number exactly depends on the choice that the customer makes because the liability will depend on whether the customer goes for the FTE model or the permanent model. As I said, we will get the confirmations by the end of Q2 and the exact numbers will be known at that time. It will then go through an actual valuation process and we'll book the liability. My estimate is that the final number, the remaining number should be lesser than the INR 170 crores that we booked in Q1.

No, my question is about Y-o-Y. This quarter, we booked INR 170 crores because it is related to gratuity and some of the other benefits, right? Now because it is labor cost, it led to increase in that number, that should be a recurring number, right? Or it is onetime revenue? I'm not very clear on that part.

So the INR 176 crores was the onetime impact because you're booking the liability YTD. Basis that head count base, you will then book the normal gratuity liability number as your number moves, and that will depend on the iteration and the new hiring that you will do.

And what will be the normal number? What will be the benefit from this normal number -- because of gratuity and other impact, what is the extra benefit we enjoy this year?

See, we don't enjoy any benefit. As I said, it is always a parcel for us. So whatever the recurring liability will come for the associate head count, we will book that as a cost and we'll correspondingly book that as a UBR. So from a [ risk ] perspective, we don't enjoy any benefit of this.

No, EBITDA-wise, I understand we don't get any EBITDA, but there might be some revenue benefit. I'm looking for revenue part.