Prabhudas Lilladher recommended hold rating on TeamLease Services with a target price of Rs 3203 in its research report dated May 29, 2019.
Prabhudas Lilladher's research report on TeamLease Services
Teamlease (TEAM) reported a tepid quarter with gross revenues declining by ~1% QoQ & specialized staffing and other HR service verticals pulled down overall performance. Specialized staffing growth in Q4FY19 was mild at 9.1% on a YoY basis. Q4FY19 performance was tepid mainly due to flat growth of specialized staffing vertical, flat EBITDA growth & associate employee's additions. Specialized staffing revenues stagnated QoQ (+0.3%) with revenues being INR 794mn. IT staffing continues to grow well but weak growth in telecom vertical is a headwind. General staffing pipeline for FY20E appears to be strong & the structural story around increased formalization of labor market & TEAM spot in flexible staffing industry keeps us positive.
Outlook
However, stretched valuations of 42.x/ 34.8x FY20/21E keeps us cautious especially when operating leverages are showing signs of weakness. Maintain HOLD rating, with unchanged target price of Rs.3203.
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