ICICI Direct recommended hold rating on TeamLease Services with a target price of Rs 2845 in its research report dated January 31, 2019.
ICICI Direct's research report on TeamLease Services
TeamLease Services’ (TLS) Q3FY19 results was a mixed bag with revenues above our estimates and margins below our estimates. Growth was led by general staffing and specialised staffing services Revenues grew 7.5% QoQ and 27.7% YoY to Rs 1172.2 crore, above our Rs 1145 crore estimate. Revenues from general staffing grew 8.6% sequentially to Rs 1062 crore, specialised staffing grew 4.7% QoQ to Rs 79 crore while HR services declined 16.8% QoQ to Rs 31 crore In terms of associate count, addition of 7548 associates QoQ in general staffing and 3800 in NETAP trainees in the quarter led total associate count to 2.1 lakh EBITDA margins declined 10 bps QoQ to 2.1% (vs. our 2.2% estimate) due to drag in margin of specialised staffing & HR services.
TeamLease’s general staffing business continues to be on strong momentum. However, continuous pressure from decline in mark-up poses a risk to margin profile and needs to be watched. Hence, we maintain our HOLD recommendation and roll over our valuation to FY21E with a revised target price of Rs 2845/share (31x FY21E EPS).
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