HDFC Securities is bullish on Teamlease Services has recommended buy rating on the stock with a target price of Rs 3300 in its research report dated May 17, 2018.
HDFC Securities' research report on Teamlease Services
Teamlease reported good set of numbers for 4QFY18 with beat on both revenue and margins. Revenue stood at Rs 9.78bn up 6.5% QoQ vs our est. of Rs 9.68bn. Growth was led by staffing segment (+5.1% QoQ, 90.3% of rev) and specialised staffing (+24.0% QoQ, 7.3% of rev, led by full quarter impact of Evolve acquisition). EBITDA margin expansion (+38bps QoQ to 2.3%) was encouraging and stood higher than our estimate of 2.0% led by richer mix.
OutlookWe earlier added back the NPV of the tax benefits availed under 80JJAA to the normalized earnings giving 40x multiple. After receiving clarity from the management about the longer term nature of the tax benefit, we are now applying the same multiple to the reported earnings. We maintain BUY with a TP of Rs 3,300 based on 40x FY20E EPS.
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