TeamLease Services, incorporated in the year 2000, is a Mid Cap company (having a market cap of Rs 5804.35 crore) operating in Services sector.
TeamLease Services key Products/Revenue Segments include Sale of services and Other Operating Revenue for the year ending 31-Mar-2021.
Financials
Investment Rationale
Teamlease reported a muted quarter (+3.1% QoQ, lower than estimate) but the margin performance was in line. The core staffing volume growth of 4.3% QoQ was boosted by NETAP trainees (+8.4% QoQ), while the general staffing volume growth stood at 2.7% QoQ, impacted by higher attrition. The hiring activity has improved in key verticals (ecommerce, telecom, consumer, and BFSI) and the company has invested to deliver ~20% growth in the core staffing segment (~90% of revenue). Specialised staffing (8% of revenue) will continue to grow, led by traction in IT hiring, increase in open positions, and hiring across domains.
The brokerage expects gradual improvement in general staffing EBITDA margin, led by mark-up improvement and automation; HR services target is >10% and specialised staffing margin will stabilise at 9-10%. It has cut revenue estimate by 2-3% due to Q4 miss and EPS estimates by ~6% after adjusting for higher tax rate. Its target price of Rs 4,850 is based on 40x Mar-24E EPS (five-year average PE of ~35x). The stock is trading at a PE of 36/28x FY23/24E EPS.
Promoter/FII Holdings
Promoters held 31.51 per cent stake in the company as of 31-Mar-2022, while FIIs owned 42.7 per cent, DIIs 15.92 per cent.
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