Moneycontrol Be a Pro
Get App
Last Updated : Jul 29, 2019 04:47 PM IST | Source: Moneycontrol.com

Buy Teamlease Services; target of Rs 3520: HDFC Securities

HDFC Securities is bullish on Teamlease Services has recommended buy rating on the stock with a target price of Rs 3520 in its research report dated July 29, 2019.

Broker Research @moneycontrolcom
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

HDFC Securities' research report on Teamlease Services


Revenue stood at Rs 12.51bn up 7.6% QoQ (organic +6.2%) vs est. of Rs 12.30bn. Growth was led by Core staffing +7.0% QoQ) offset by HR services (~2% of rev, - 18.5% QoQ). Specialised staffing (~8% of rev) grew 23.7% QoQ led by Ecentric integration. EBITDA margin was down 36bps QoQ to 1.9% (vs. est. of 2.1%) due to loss in HR services (delay in collections). Core staffing margins contracted 27bps QoQ to 2.1%, impacted by wage hike offset by higher associate/core ratio (+2.6/19.4% QoQ/YoY). Depreciation and interest cost spiked due to Ind AS impact, net impact on P&L is negligible. Growth in mark-up was heartening (highest in five qtrs), +2.2% QoQ to Rs 730. Salary funding exposure remained flat QoQ at 14% (lowest in the industry). Associate addition in core staffing revived (+4.2% QoQ) and demand continues to be broad based. Specilaised staffing organic growth was 3.5% QoQ and EBITDA margin expanded 25bps QoQ to 6.4%. Growth will be led by IT staffing (Ecentric) while Telecom (Evolve) will take some time to recover.


Outlook


We maintain BUY on Teamlease based on in-line 1QFY20. Positives include (1) Acceleration in core staffing growth, (2) Improving core productivity and (3) Growth in mark-up. Our TP Rs 3,520 is based on 40x June 21E EPS.


For all recommendations report, click here


Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.



Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.
First Published on Jul 29, 2019 04:47 pm
Loading...
Sections
Follow us on
Available On