ICICI Direct is bullish on Team Lease has recommended buy rating on the stock with a target price of Rs 2205 in its research report dated August 01, 2020.
ICICI Direct's research report on Team Lease
TeamLease Services’ (TLS) results were above our expectation, especially on the profitability side. While revenues fell 14.6% QoQ, EBITDA margins improved 70 bps QoQ to 2.2%. This was mainly due to 20.5% QoQ fall in general staffing core employees and higher margins in specialised staffing. General staffing core to associate ratio also improved from 264 to 283. The company has moved to the new tax regime, which has helped improve its cash flow. The overall cash conversion has improved to 80% in Q1FY21.
This, coupled with other cost rationalisation like lower facility cost bodes well for margins. In addition, cashflows are expected to improve led by lower tax outgo and efficient working capital management. Hence, we maintain our BUY rating on the stock with a revised target price of Rs 2205.
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