Buy TeamLease Services; target of Rs 2050: Emkay Global Financial

Emkay Global Financial' research report on TeamLease Services

The company reported a steady Q2 operating performance. Revenue grew 4.9% QoQ/8.4% YoY to Rs30.3bn, in line with our estimate. EBITDA grew 14.5% YoY, with acquisitions contributing ~5%. General Staffing revenue rose 7% YoY, adding 37 new logos with more than 65% under the variable model. Specialized Staffing revenue grew 34% YoY (organic 17%). It serves over 90 GCC clients, with increased momentum in Life Sciences, Telecom, Consulting, Engineering, BFSI, Consumer, and IT. While BFSI headwinds persist in General Staffing, contributions from retail, e-commerce, consumer, and telecom verticals are promising. The company expects a steady recovery in H2, steered by the contribution from GCC, Degree Apprenticeship (DA), and consumerfacing sectors. The management remains confident of sustaining the EBITDA growth momentum in FY26 and expects ~25% growth, with focus on revenue growth, cost optimization, and operating leverage. We largely retain our FY26- 28E EPS (<1% change), factoring in the Q2 results and anticipated recovery across segments.

Outlook

We upgrade TeamLease to BUY from Add, with an unchanged SOTP-based TP of Rs2,050, considering ~8%/10% correction in the stock price over the past 3M/6M.