Quess Corp Ltd (NSE: QUESS) Q3 2026 Earnings Call dated Jan. 29, 2026
Corporate Participants:
Kushal Maheshwari
Guruprasad Srinivasan — Executive Director
Neeraj Jain — cfo
Presentation:
operator
Ladies and gentlemen, good day and welcome to QuestCorp Q3FY26 earnings conference call. As a reminder, all participant lines will be in the lesson only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Sir Siddharth Jabbak. Thank you. And over to you, sir. Ladies and gentlemen, good morning and thank you for joining us on the post Q3, 26 and 9 month FY26 results conference call for QuestCorp Limited it is my pleasure to introduce the senior management team of questcop who are here with us today to discuss the Results. We have Mr. Guru Prasad Srinivasan, Executive Director, Mr. Lohit Bhatia, CEO Mr. Kushal Maheshwari, Head Investor Relations and Treasury, Mr. Neeraj Jain, CFO Mr. Kapil Joshi, CEO of Quest IT Staffing and Mr. Nitin Dave, CEO of Quest Staffing Solutions. We will begin the call with opening remarks by the management team and thereafter we will open the call for a Q and 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.
Kushal Maheshwari
Thank you, Siddharth. Good morning everyone and thank you for joining us for our Q3 FY26 and nine month FY26 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. Guru Prasad Srinivasan for his opening remarks.
Over to you, Guru.
Guruprasad Srinivasan — Executive Director
Thank you, Kushal. Good morning everyone and thank you for joining us today for Quest Corp’s Q3 FY26 earning call before moving to quarterly performance. I’d like to briefly outline the strengthening of one leadership team at Quest. 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 Quest 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 there 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.
Kushal Maheshwari
Thank you Guru. Good morning everyone. Thank you for joining QuestCorp’s Q3 and 9 month FY26 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 3930 crores representing a 3% quarter on quarter growth. The EBITDA stood at 80 crores, a new quarterly milestone for our company marking a 28 crore year on year increase and a 4% sequential growth with EBITDA margins expanding to 2.03% this quarter.
The adjusted pack came in at 62 crores 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 remain 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 Q3FY26 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 3409 crore with an operating profit margin for the segment at 45 crores reflecting in a stable performance despite the seasonal softness in the BSI and the consumer, retail and telecom, partially offset by the growth in the M and A LED headcount additions.
Headcount in the segment remained steady at approximately four 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 Y2B to 222 new contracts reinforcing our leadership position across the BSSI. 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 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 Court will drive the greater formalization, consolidation and stronger governance, creating structural tailwinds for Quest 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 revenue stood at 230 crores while EBITDA increased to 29 crores 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 1300 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 PAPM provider 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 the segment stood at 290 crores 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 were 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 are preparing to launch the AI enabled Hamara Jobs Marketplace aimed to further strengthen our leadership in blue collar hiring.
I am particularly proud to share that Quest Corp. Has been certified as a great place to work for the seventh consecutive year. The collective voice of our people has proudly elevated Quest 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 FY26 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.
Neeraj Jain — cfo
Thank you Lohit Good morning everyone and thank you for joining us for QuestCorp Q3 FY26 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 the financial highlights for Q3FY26. Q3FY26 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 rigor. Consolidated revenues for the quarter stood at 3930 crore representing a 3% quarter on quarter increase while being marginally lower on a year on basis due to calibrated headcount management.
EBITDA for the quarter came in at 80 crore. This is 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, tighter cost controls Reported PAT stood at 55 crores, up 32% year on year and 6% sequentially on an adjusted basis excluding one time exceptional cost relating to labor code provisioning. Our adjusted pad 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 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 FY26 performance snapshot. For the nine month ended December FY26 our consolidated revenue stood at 11,413 crore up 1% year on year. EBITDA for nine months FY26 increased to 226 crore, a growth of 16% year on year with margins expanding by 26 basis points to 1.98%.
Adjusted pad for nine months 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 Rs 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 engagement accounted for 6.72percent of the total headcount in professional staffing, supporting our margin sustainability. The improvement in margins reflect 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 crores while EBITDA increased to 20 crores, 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 improvement 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 invent in technology and growth initiatives. I’ll summarize for Q3FY26. 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 Kushan. Thank you Neeraj. We are now open for the question and answers. Over to you moderator.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Deep Shah from BNK Securities. Please go ahead.
Kushal Maheshwari
Yeah, hi. Thanks for the opportunity. So 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 dray zone where they might have business with us and then at a subsequent date they might look to prune down. So that is one second on the one time benefits that are supposed to flow from the Pradhan Mentary Vixit Bharat Rojdar Yojana. Those are supposed to Start next June or July. Right. So by that time we would 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.
So is this understanding correct? I just wanted your thoughts on on these two things. Thank you.
Guruprasad Srinivasan
Thank you. Deep, I would ask to answer the questions on BFSI sector in general stocking as well as the Pradhan Manti Liquid Yojana scheme impacting our general stocking business.
Kushal Maheshwari
Yeah, Good morning Deep. So 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 rolls. As we looked at that particular event, one thing emerged very very clearly to us as Quest 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 volume 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 Vixit 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.
Guruprasad Srinivasan
Deep. I hope this answers your question. Yeah, yeah, perfect. This is helpful. Thanks. Thanks guys. Thank you very much.
operator
Thank you. The next question is from the line of Dipesh Mehta from MK Global. Please go ahead.
Kushal Maheshwari
Yeah, 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 YUI perspective that is question one and when the growth returns, whether the composition of revenue would be favorable to margin trajectory. Because in last couple of quarter because of business mix change margin came under pressure for general staffing. So I just want to get sense about two aspects. One is returning to double digit.
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 implication. 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 and whether the incremental cost which can can come because of the PF gratuity kind of thing. Whether any of this we need to bear or we could be able to pass into to clients. Thank you.
Neeraj Jain
Thank you. Thank you. Dipesh. I would ask Lois to cover the questions on headcount growth and margins trajectory for general staffing and consequently on the impact of new labor code implementation on our branches. I would ask Neeraj to chip in. Over to you Lois.
Guruprasad Srinivasan
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 backend 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. And 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 customers, 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 delivery, 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.
So 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 Questcorp. This also is the change for graduating 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 incoming times. Neeraj, I’ll hand over to you.
Neeraj Jain
Thank you Lohit. So Dipesh, there are two aspects that you have asked. One is the impact of labor code in Q3. So as you know basis the requirement of the law and as per the guidance note released by the Institute at Quest, we have computed the impact of gratuity leaving cashman of the YTD and that is the one time exception cost that you see in the financials. So whatever is as per our contracts billable to the customer that has basically been covered as part of our unbilled revenue. So the impact in RPNL 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. And given our internal structure we don’t expect a material impact basis. Our EBITDA base. I would say a maximum of 1 and a half to 2 crore. We see as an ongoing impact because of our attrition rate because of our existing structure of wages in the company. So on an overall basis I see it as a very immaterial impact on our margins. As we move forward, I hope.
operator
Sorry to interrupt. So we have lost the line of Sidhapesh. We’ll move ahead. The next question is from the line of Siddharth Jabhag from IIFL Capital Service. Please go ahead.
Kushal Maheshwari
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 have indicated an EBITDA margin of 12.8% for the region. And in preview also you mentioned double digit margins. However, if we look at staffing companies operating in Middle east industry EBITDA margins are typically around 4%. So could you please help us understand what are we doing differently that allows us to operate at materially higher margins in this region? And secondly, how sustainable are these margins over the medium to long term? My second question is on the expected credit loss allowance of rupees 120 crore that was provided on trade receivables in 4Q FY25.
Could you share whether any recovery has been made from this data so far and how we think about the potential write backs or further recoveries going ahead? Thank you.
Guruprasad Srinivasan
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 now.
Neeraj Jain
Hi Sudhak. 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. So 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 2000 book size. With that kind of a volume, our IDC cost also is well optimized and is kept on a fairly low side. So I think the comparison with low margin businesses could possibly be because they do not have the scale that Quest has in some of these geographies. Middle east being one of those.
Kushal Maheshwari
Over to Neeraj to answer your question on the expected credit loss of our 120 crores that we have taken in Q4FY25. Thank you. Thank you, Lohit. So Siddharth, on the ECL provision that we took in Q4FY25, this is largely for the Skilling project that we are doing with the government. And 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 escrowcon process. So because of that new process and.
Both state government and RBI and all. Of us are trying to work it around, it has unfortunately delayed the collection. From Q3 to Q4. So we expect some of those collections to flow back in Q4. And just also want to mention that while these have been already provisioned, so any collection that we do from here on is going to positively impact our numbers as we move forward.
operator
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 and we had taken an exception credit loss on that and as committed the effort is on. And as and when the collection happens, we’ll report back to the street.
Kushal Maheshwari
Thank you. That was very helpful.
operator
Thank you. The next question is from the line of Karan Gupta from Atmil. Please go ahead.
Guruprasad Srinivasan
Yeah. Hello. Am I audible?
Guruprasad Srinivasan
Yes sir, you’re audible. Please go ahead.
Kushal Maheshwari
Yes. Okay. So my question is regarding on the other expensive side. So on a YUI basis there is 24, 25% of down in the other income side. And for quarter three, FY25 you already adjusted the numbers of you know, Digi Digitized Solutions and Blue Spring. But still there is a drop of 2025 which is majorly contributing to the profit side of around 55 crore. So can you put some light on this thing and how much this other expenses part on a Consolidated basis is contributed to each segments. Hello.
Guruprasad Srinivasan
Okay, first and foremost I mean what I understood is on the total indirect cost you are limiting to is what I presume. So our average total cost per quarter is about 102 crores across all across group as part of the IDC and there are few cost in the earlier. If you are comparing year on year there was a pre merger expenses which wouldn’t recur in this current year. So that’s the kind of sort of gap there. But otherwise the run rate where we are today is about 102 crores of cost per quarter and that has been intact for last three quarters.
Kushal Maheshwari
So this is you are saying about the other expenses part. My question was on the other expense 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 on a yoy basis it is around 192 crore. So that’s the drop of something around 2035%. So that’s what I’m asking which is basically majorly contributing to the profit side of around 5055 crore. So can you put some light on what what are these other expenses are. 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.
Neeraj Jain
Okay. Okay. Okay.
Kushal Maheshwari
Okay.
Kushal Maheshwari
Thank you.
operator
Thank you. The next question is from the line of Ahmed from Edgy House. Please go ahead. Requesting you to please unmute your line. Sorry to interrupt. So Ramit, I request you to kindly get closer to the mic.
Neeraj Jain
My question is like what are the net additions of the headcounts in the quarter. Or you want guidance? Actually both. Yeah, it gives the question to Nitin. Yeah, good afternoon.
Guruprasad Srinivasan
So while as Lohit had explained already that because of some seasonal de hiring and also multiple wage course discussions where customers started taking stock of what is the current situation, the headcount in that. However going forward, you know we have a very strong pipeline, a very healthy open mandate of 35,000 plus as mentioned and also a strong pipeline. So with that we are 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 Nohit mentioned and some of the investments that have been made the results of the same would be expected in the coming quarter.
So we are expecting while the current quarter has been flat the next Quarter will be a growth quarter for us.
Kushal Maheshwari
Actually in the previous con call I think so we were guided like 10 to 15,000.
Neeraj Jain
Yes. So in the. You know, as it was mentioned by the Lohit in the opening speech itself on 21st November, the government actually introduced the wage codes with immediate implementation. So at that point of time with 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 and quarter will apply because we have a sourcing engine in place, we have a source pipeline in place.
So 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. But going forward this growth will be there.
operator
So my second question was like is the 2% EBITDA margin the new normal?
Guruprasad Srinivasan
So 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.
Kushal Maheshwari
Guru, if you can.
Guruprasad Srinivasan
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. So that has helped us to keep our margin consistently to be around 2% and we are able to do that for last two quarters. Are we going to focus on product mix and continue to work on the product mix to.
Yes, that is. That’s definitely on our strategy and plan. We would. 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 reach there. So we should be able to.
Kushal Maheshwari
Three for the future.
Neeraj Jain
Sorry, I appreciate answering the question. Thank you for. Thank you.
operator
Thank you. The next question is from the line of Ankit from RNM Capital Trust. Please go ahead.
Kushal Maheshwari
Yeah, hi, good morning and I hope I’m audible.
Kushal Maheshwari
Can you just Repeat. Can you be a little louder?
Guruprasad Srinivasan
So my, my question is on the labor implementation. I heard that we have been seeing going, going shell and we see that as a catalyst for us. Right. I just also wanted to understand if we see any challenges, like any sector or industry have more employees rather than because of this.
Kushal Maheshwari
If I can understand your question. You are asking whether Quest will face any challenges in any vertical as part of Labor Code implementation.
Guruprasad Srinivasan
Yeah. Is that your question? Yes. Many of their employees. Or verticals. So you are saying whether Quests will be impacted by any insourcing of any vertical due to labor code implementation? Is that your question? Yes. Okay, I’ll ask loid to answer.
Kushal Maheshwari
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. You know, 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. So 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 graduate payments and other implications remains the same both ways. It has to be paid as per the new legislation. You would also remember that Quest, 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 Quest 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 in working with Quest 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 codes 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.
operator
Thank you. The next question is from the line of Akshay Savla, an individual investor. Please go ahead.
Neeraj Jain
Hello. Am I audible? Yes. Hello, background. Yeah, so I, I had a question regarding the professional staffing. So right now it is around single digit as a percentage of revenue. So going forward what percentage can we expect from this segment? Because the margins are in double gd so there. So just wanted to know about that.
Kushal Maheshwari
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 five years ago in this business. We were doubling down from a EBITDA margin perspective, 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 five 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%.
But now I’ll hand over to Kapil on how does he see the market opportunity hereafter to grow and expand even further.
Guruprasad Srinivasan
Yeah, thank you for the question. And yes, we are cognizant about, you know, top line growth, revenue growth, which is currently in single digit. But going forward we expect it to be much better. If you see our sales pipeline, we are actually focusing on acquiring the good logo. So far this year we have acquired 48 new logo in the last quarter. October, November, December alone when you know, hiring are actually subdued, we acquired 18 new logo. I think you know, in next 12 months this 48 logo, what we have acquired will have a headcount buildup and.
Kushal Maheshwari
That too in our niche Superlix segment. Where margins are better. Okay. So. You know we expect H1 is anyway is good for our industry, IT industry. So at least for next two quarter we expect the growth will be a top line led growth driven by the headbound addition. Yeah. Yeah. Thank you. Thank you. The next question is from the line of the page meta from MK Global. Please go ahead. 2 Question Just want to get sense about how one should look payout any ratio we have in mind in terms of the payout ratio and 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 stepping up? Thank you. Just a clarification when you refer to payout ratio. Yeah. We have a dividend payout policy and as per the policy our payout ratio is 75% up to 75%, 75% of our free cash flow or a block of three years. Does that answer your question on dividend payout and on your question on sector wise concentration on general staffing I would ask Lloyd to answer the question. So yes, in general staffing our larger businesses continue to be crt followed by bss, followed by Manufacturing, Telecom, fmcg, fmcd, E Commerce, Logistics, Health care, supply chain and governmental. 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, stuffing these logos take about three to six 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 Quest Corp. Level it would even be lower because 15% to 60% of quest corps. So if that gives you a glimpse, there is no one major item which creates the book for us.
Neeraj Jain
Understand? Thank you.
Guruprasad Srinivasan
Thank you.
operator
Thank you. The next question is from the line of Gunit Singh from Countercyclical pms. Please go ahead.
Kushal Maheshwari
First of all, 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 substantial change in the industry?
Guruprasad Srinivasan
When you’re looking at margins then they were looking at consolidated Quest before demerger. Now the margins which we are reflecting over here in the range of 2% are post demerger for a Quest Corp. Itself. So if you look at it, if you look at the history of our company, we underwent a demerger which was since the 1st of April 2024. And if you look at our financials, Blue Spring and digitized are not part of the company. So when prior to that, when you’re looking at margins they were consolidated Quest.
Kushal Maheshwari
You can hit help me, I mean correct me. Were the staffing margins around 2% of sales around say five years back or pre Covid or has there been a general trend of margins declining?
Guruprasad Srinivasan
Okay, just to add so one is as Kushal said, it’s a deburged 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%. So way back with 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 Brain Hunter, 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 four, four and a half percent.
But that businesses have been discontinued and Brain Enter has part of team culture has moved into digitized. So it’s non comparable. We would be happy to take this question if you have anything specific you can reach out. Kushal, we can share but the product mix in itself has changed and there are set of businesses that has been discontinued which are no more part of workforce and hence steady state. If you look at we have been 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.
Kushal Maheshwari
That Also to add to that, in the last five quarters our EBITDA margin has expanded from 1.6% to currently at 2.03%. So if you look at it, there’s been a 47 basis point improvement in EBITDA margin in the last five quarters. Of our operation of Questcorp.
Neeraj Jain
Got it sir. So my second question would be around our current trade receivables over six months and given that we took an ECL of about 100 to 150cr in last year have we taken any steps to send in our processes or send in our collections?
Kushal Maheshwari
I would ask Neeraj to answer this question on strengthening our financial controls and processes. So Guneet, 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 and because of some RBI process, the collection on that part is a bit delayed. But 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. So I think we are making significant improvement on our collections. Our EBITDA to OCF is at a healthy 92%. So we are on the right path and we’ll keep the momentum as we move into Q4. Six months currently. Sorry trade receivable. Trade receivables over six months. If you look at our average DSOs, this not being a balance sheet quarter, we not reporting it. But on the general staffing the average DSO is around 24 days with AR at 10 days and Uber at 14 days and UBR at 10 days.
Kushal Maheshwari
All right sir, got it. Thank you very much.
Kushal Maheshwari
General staffing contributes to 86% of our revenue. I hope this answers your question.
operator
The last question is from the line of Samai from Helias Capital.
Guruprasad Srinivasan
Yeah, I thank for the opportunity. Wanted to ask you about your professional staffing segment. So the margins are improving like from 10% in Q1 then to 12 in Q2 and now 12.5. So 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 20 now? And similarly for your overseas business as well the marginal shot up to 7%. So how should we bring forward?
Kushal Maheshwari
Thank you Sameh for your question. I would ask Kapil to answer your question on the margins for our professional staffing business and overseas business. I would ask Lohit to chip in. But overall if you look at overseas business which has cost 7%, it has been a staggered and implemented strategy and trying to improve the profitability diversification across our regions which has reflected in this quarter’s performance for overseas business over do you couple for professional staffing to finish starting?
Guruprasad Srinivasan
Like Lohit mentioned in initial call, it was conscious efforts from us for last three to five years to change our portfolio and product mix client Mix we have moved from entry level L1LT support role to niche supernish area where we support our clients. And simultaneously in last three 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.
Guruprasad Srinivasan
So Basically so about 12% is my understanding right? Or would it be between 11 to 12?
Kushal Maheshwari
Yes, you can assume that it will be range bound between 11 to 12%. And for the overseas business. Overseas we’ve been steady state between six and a half to seven. So 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 which for Quest is above 50% already? What is the margin earned per person? What is the ROE which will in the case of Quest this year should be at 20% as we end? And how much is the free cash that the company generates on a year on year basis? So I think these are the principles at which a workforce management in a staffing company should be calculated towards.
Right. And another question regarding your contingent liability. So I see for the direct tax it remains same as what it was in FY25 at 296 crores. Could you just share an update on. Your indirect tax contingent liability? Regarding your GST contingent liability. So it was 372 crores in FY25. Could you share some color like given updated? Is it still the same or has it been any change in that? No, there is no material movement on the GSE front. Okay. And regarding your tax expense, I think you have got a tax benefit of 4 crores in this quarter versus a tax expense of 6 crores last quarter. Just how should we see the tax rate? Effective tax rate going forward? Yeah. So 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. Yeah, thanks. Thanks so much for this. Yeah, that’s it from me. Thank you.
operator
Thank you ladies and gentlemen. We take that as the last question. I would now like to hand the conference over to Sir Lohit for the closing comments. Over to you Sir.
Kushal Maheshwari
So 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 few four to five 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.
operator
Thank you on behalf of IIFL Capital Services Ltd. That concludes this conference. Thank you for joining us and you may now disconnect your lines.