Buy TeamLease; target of Rs 3105: Motilal Oswal

Motilal Oswal is bullish on TeamLease recommended buy rating on the stock with a target price of Rs 3105 in its research report dated November 08, 2023.

Broker Research

November 14, 2023 / 14:45 IST

Buy

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Motilal Oswal's research report on TeamLease

TEAM’s 2QFY24 revenue growth of 16% was in line with our estimate. Revenue growth was led by 17% YoY growth in general staffing. Specialized staffing continued to be affected due to weak IT services demand. It reported 1.4% EBITDA margin (in line). PAPM started to see initial signs of improvement. The performance in general staffing was encouraging, as TEAM added 14.2k associates to its workforce and increased the core staff marginally, leading to better productivity. We expect demand to stay robust in general staffing. Moreover, while the company faced headwinds due to cancellation of NEEM, a pickup in NPAS and WILP helped TEAM to largely mitigate the headcount lost in NEEM. Though realizations for NPAS and WILP (INR 550 PAPM) are lower than NEEM (INR 1,100), incremental headcount in DA should aid to 2HFY24 growth.

Outlook

We largely maintain our FY24/FY25 EPS estimates on in-line performance. Our TP of INR 3,150 implies 28x FY25E EPS.

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