Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    
Google
Web www.equitybulls.com
Union Budget
Budget 2011-2012 Home
Industry Expectations - Budget 2011-2012
Industry Reactions - Budget 2011-2012
Budget 2010-2011
Budget 2010-2011 Home
Industry Expectations - Budget 2010-2011
Industry Reactions - Budget 2010-2011
Contributor's Corner
Bonanza Portfolio
Hemant K Gupta
Krish Bhatt
S A A R T H I
Trinity Investments
Exchange Information
BSE 2009 Holidays
NSE 2009 Holidays
Investor Guide
Depository & Dematerialisation
Grievance Redressal
Investor Guide
SEBI
Trading of Securities
Transfer of Securities
Your Rights
Budget 2009-2010
Budget 2009-2010 Home
Industry Expectations - Budget 2009-2010
Industry Reactions - Budget 2009-2010
Interim Budget 2009-2010 Home
Industry Expectations - Interim Budget 2009
Budget 2008-2009
Railway Budget 2008-2009
Industry Expectations - Budget 2008
Union Budget 2008-2009
Highlights of Budget 2008-2009
Summary of Budget 2008-2009
Industry Reactions - Budget 2008
IPOs
Current IPOs
Past IPOs
IPO Subscription
Mutual Funds
Gold Exchange Traded Fund
MF Unique Holding
Forthcoming Dividends
ELSS Schemes Comparison
Tax Plans
New Fund Offers
Research
Arbitrages
Equity
Market Whispers
Tax Planning
Home
Equity Linked Savings Scheme
Post Office MIS
9% GOI Senior Citizens Savings Scheme
8% Savings (Taxable) Bonds
Kisan Vikas Patra
National Savings Certificate
Public Provident Fund
IPO News

| More

TeamLease Services - IPO Note - Valuations expensive - Angel Broking

Posted On: 2016-02-06 09:54:57

TeamLease Services Ltd (TSL) is one of India's leading providers of human resource services in the organized segment. It's staffing business accounts for 98.8% of the revenues while HR services accounts for the balance. It has a market share of ~6% in the Indian Flexi-staffing Industry. It delivers staffing services across industries like banking, manufacturing, retail, telecom, etc. The company has shown significant growth over FY2011-15, posting a revenue CAGR of 30.7% and after posting losses till FY2013, the company has since turned profitable and reported net profit of ~Rs. 30cr in FY2015 vs. a net loss of ~Rs. 16cr in FY2012.

Lower penetration levels suggest huge growth potential: The flexi-staffing industry in India as of FY2014 was valued at around Rs. 180-220bn and the penetration level of the industry in India at ~0.4% is lower than in developed regions where the penetration level is between 1.5-3.0%. Going forward, as per industry reports, Flexistaffing industry is expected to report a CAGR of 25-30% and be around Rs. 610-640bn by FY2019 and the penetration level is expected to improve to 1.0% over the same period on back of increasing number of enterprises turning formal, skill development in the country, and regulatory amendments in favour of formal employment.

Focus on improving operating margins: The HR services business, which commands higher margin, accounts for a very small portion of company's overall top-line. HR services offers recruitment services, regulatory services, skills and development corporate training, and payroll services. The company is now focusing on such higher margin businesses apart from its regular staffing business. It is also looking for opportunities in the IT vertical and improving employee productivity.

Intense competition and lack of pricing power: The flexi-staffing industry is highly fragmented with intense competition. Almost 70-80% of the industry is unorganized consisting of smaller players and balance comprising of major players like Adecco, Randstad, Quesscorp, etc. TSL faces stiff competition from these companies as well as other small players, thus leading to lack of pricing power.

Outlook Valuation: TSL being leading staffing company in India and has the potential to further increase its market share. However, although the company has shown good growth momentum, it operates in an industry characterised by intense competition, lack of pricing power, low entry barriers and high degree of fragmentation which renders limited scope for margin improvement.

On the valuation front, at the upper end of the price band, the pre-issue P/E works out to 60.6x its 1HFY2016E annualised earnings. In comparison, its global peer Adecco is trading at 12.9x 9MCY2015 annualised earnings and has a better margin and ROE profile. Further, post the IPO, TSL's ROE is not expected to improve significantly in the near term. Considering the above mentioned business concerns and expensive valuation, we recommend a Neutral on the issue.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com





Other Headlines:

Price band for Mahindra Logistics Limited's IPO fixed
Indian Energy Exchange to list on Oct 23, 2017
Mahindra Logistics Limited IPO to open for subscription on Oct 31, 2017
Reliance Nippon Life Asset Management Limited's IPO to open on Wednesday, October 25, 2017
IPO Note - General Insurance Corporation of India (GIC Re): Angel Broking
General Insurance Corporation Of India - IPO Note - Arihant Capital Markets
Indian Energy Exchange - IPO Note - Angel Broking
Indian Energy Exchange Limited IPO to open for subscription on Oct 9, 2017
MAS Financials Services Ltd - On the track to excel - Angel Broking
General Insurance Corporation Of India's IPO to hit markets on Oct 11, 2017
Godrej Agrovet Limited IPO receives huge response with subscription of 90.18 times till 3:45 PM
Godrej Agrovet Limited IPO receives subscription of 33.27 times till 2:30 PM
Godrej Agrovet Limited IPO receives subscription of 4.42 times till 12:00 noon
IPO Note - MAS Financials Services Ltd: Angel Broking
Prataap Snacks Ltd to list today
IPO Note - Godrej Agrovet Limited: Angel Broking
SBI Life Insurance Company Limited to list on Oct 3, 2017
Godrej Agrovet Limited - IPO Note - Sushil Finance
MAS Financial Services Ltd's IPO to open on Oct 6, 2017
Godrej Agrovet Limited fixes IPO price band as Rs. 450 to Rs. 460
SBI Life Insurance Company Limited IPO gets subscription of 3.58 times
Godrej Agrovet Ltd IPO to hit markets on Oct 4, 2017
ICICI Lombard General Insurance Company Limited IPO receives subscription of 2.98 times
Prataap Snacks Limited - IPO Note - Angel Broking
SBI Life Insurance Co Ltd - IPO Note - Angel Broking
Matrimony.com Limited to list on Sep 21, 2017
SBI Life Insurance Company Limited IPO to hit markets on Sep 20, 2017
ICICI Lombard General Insurance Company Limited IPO to close on Sep 19, 2017
Capacit'e Infraprojects Limited IPO receives overwhelming response
Matrimony.com Limited IPO receives subscription of 4.44 times
ICICI Lombard General Insurance Company Ltd - IPO Note - Angel Broking
Capacit'e Infra projects Ltd - IPO Note - Capacit'e for towering growth - Angel Broking
Matrimony.com - IPO Note - Arihant Capital Markets
Capacit'e Infraprojects Ltd - Healthy order book with strong execution... - Geojit
Capacit'e Infraprojects Limited IPO to open for subscription on Sep 13, 2017
Matrimony.com Limited IPO to open for subscription on Sep 11, 2017
Bharat Road Network Limited IPO subscribed 1.81 times
Dixon Technologies India Limited IPO receives subscription of 117.83 times
Matrimony.com - IPO Note - Angel Broking
ICICI Lombard's IPO to hit markets on Sep 15, 2017
Bharat Road Network Ltd - IPO Note - Angel Broking
Dixon Technologies India Ltd - IPO Note - The trajectory of strong client base continues - Angel Broking
IRDAI grants in-principle approval for Reliance General Insurance IPO
Dixon Technology IPO to open for subscription on Sep 6, 2017 - Sushil Finance
Future Enterprises Ltd to divest stake in Future Supply Chain Solutions Ltd through IPO
Bharat Road Network Limited IPO to hit markets on Sep 6, 2017
HDFC updates on proposed IPO of HDFC Standard Life Insurance Company Ltd
Srei Equipment Finance plans to dilute upto 25% of its capital
Cochin Shipyard Ltd - IPO Note - Angel Broking
Security and Intelligence Services (India) Ltd - IPO Note - Angel Broking


Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2017