Motilal Oswal is bullish on TeamLease Services has recommended buy rating on the stock with a target price of Rs 3500 in its research report dated July 24, 2018.
Motilal Oswal's research report on TeamLease Services
TeamLease's (TEAM) revenue grew 20% YoY to INR10.2b, (in-line), with strength seen across segments (12% YoY growth in General Staffing, 205% YoY in Specialized Staffing and 156% YoY in Other HR Services). Coming out of a soft FY18, headcount growth revived sharply in 1QFY19 - net addition of 5,400 sequentially was close to the 5,900 added for full-year FY18. We value TEAM using DCF to reach a price target of INR3,500 (implied target P/E of 37x on FY20E EPS). Although we have revised our margin assumption downward by 10bp for FY19 to factor in the near-term headwinds (and EPS by 5%), our estimates beyond that remain unchanged.
At 44/28x FY19/20E earnings, valuations are rich, and we expect a CAGR of 24/46/49% over FY18-20. Sustained superiority of financial performance because of industry trends, business model and operational excellence continue strengthening our long-term view. Buy.
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