Buy TeamLease Services, target price Rs 4,850: HDFC Securities
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.
By ETMarkets.com | Updated:
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HDFC Securities has buy call on TeamLease Services with a target price of Rs 4850. The current market price of TeamLease Services is Rs 3378.8.
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
For the quarter ended 31-03-2022, the company has reported a Consolidated Total Income of Rs 1822.07 crore, up 3.11% from last quarter Total Income of Rs 1767.18 crore and up 34.99% from last year same quarter Total Income of Rs 1349.80 crore. Company has reported net profit after tax of Rs 31.63 crore in latest quarter.
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.
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.
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
For the quarter ended 31-03-2022, the company has reported a Consolidated Total Income of Rs 1822.07 crore, up 3.11% from last quarter Total Income of Rs 1767.18 crore and up 34.99% from last year same quarter Total Income of Rs 1349.80 crore. Company has reported net profit after tax of Rs 31.63 crore in latest quarter.
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.
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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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