TeamLease Services - Q2FY21 Result Update - ICICI Direct

TeamLease Services' (TLS) results were broadly in line with our expectations. Revenues and margins posted marginal decline QoQ. Revenues declined 0.6% QoQ at Rs. 1,129 crore (vs. our Rs. 1,138 crore estimate) while margins fell 13 bps QoQ to 2.0% (vs. our estimate of 2.1%). General staffing core to associate ratio also improved from 283 to 300.

Valuation & Outlook

The company's general staffing business is expected to see improved traction led by opening of the economy, healthy client addition and market share gains. Further, formalisation of the economy (led by new labour laws) will boost long term revenues. In addition, we expect specialised staffing revenues to improve led by a revival in IT services and reducing competitive intensity. This, coupled with cost rationalisation, bodes well for margins. In addition, cashflows are expected to improve led by lower tax outgo and efficient working capital management. Hence, we maintain our BUY rating on the stock with a revised target price of Rs. 2840 (34x FY23E EPS).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_TeamLease_Q2FY21.pdf

Shares of TeamLease Services Ltd was last trading in BSE at Rs.2423.95 as compared to the previous close of Rs. 2331.1. The total number of shares traded during the day was 87 in over 34 trades.

The stock hit an intraday high of Rs. 2435 and intraday low of 2328.65. The net turnover during the day was Rs. 204098.

Source : Equity Bulls

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