NSE: TEAMLEASE | BSE: 539658 | ISIN: INE985S01024

INDUSTRY : Special Consumer Services

TeamLease Services Ltd.

Weak Stock

1535.35 -14.10 (-0.91%)

52.02% Fall from 52W High

Volume: 9,596

NSEApr 03, 2020 15:31

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TeamLease Services Ltd.    
30 Mar 2020
1535.35
-0.91%
Economic Times
The day's meltdown wiped off Rs 2.74 lakh crore off the market capitalization of BSE-listed companies.
ICICI Securities Limited released a Hold report for TeamLease Services Ltd. on 18 Mar, 2020.
TeamLease Services Ltd.    
18 Mar 2020
1535.35
-0.91%
ICICI Securities Limited
The spread of Covid-19 has led to lockdowns in many countries globally and could have adverse economic implications. In addition, the recent fall in crude prices could also have an adverse impact of fiscal health of oil producing countries. As a result, IT companies, which have considerable exposure to verticals such as oil, energy & utilities; banking & capital markets; manufacturing and travel & transport could see an adverse impact from the ongoing crisis. Companies like Wipro, Infosys in large cap and MindTree, NIIT Tech, Sonata software, Cyient, Accelya Solutions among...
TeamLease Services Ltd. has lost -38.27% in the last 3 Months
TeamLease Services Ltd.    
12 Mar 2020
1535.35
-0.91%
Business Standard
According to the data from TeamLease, the number of gig jobs that get posted on a daily basis is 920 on Freshersworld.com and 540 on TeamLease.
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Promoters pledge increased to 1.23% of holdings in Dec 2019 qtr.
TeamLease Services Ltd.    
13 Feb 2020
1535.35
-0.91%
Teamlease: Reasonable headline numbers, but it gets less pretty up close

Suhani Adilabadkar

Established in 2002, TeamLease Services is a leading human resource service company in India. The company is a one-stop provider of human resource services to industries across diverse functional roles, offering staffing, payroll processing, recruitment, compliance and training services. It has presence across the country in over 8 locations and with more than 2,250 clients and 1,685 core employees.

TeamLease has hired 17 lakh people over the last 17 years and has more than 2 lakh open jobs every day. The company delivers staffing services across various sectors, consumer durables, chemicals, manufacturing, media and telecom, retail, banking, financial services, insurance, e-commerce, pharmaceuticals and healthcare. It also operates India’s first vocational university and the PPP National Apprenticeship Program (NETAP). Present in all 29 states with a network of partnerships, the company has 6% market share in the Indian staffing industry. 

Quick Takes:

  • TeamLease clocked a revenue growth rate of 15.3% YoY with its operating profit at Rs. 27.5 crore, growing 12% YoY in Q3FY20. 

  • PAT stood at Rs. 26 crore in Q3FY20 against Rs. 25.2 crore in the same period, previous year rising 2.6% YoY.

  • TeamLease.com saw 1 lakh job postings and 20 lakh applications in Q3FY20.

  • The company acquired 74% stake in IMSI Staffing to get an entry into infra staffing vertical.

  • The company is facing cost pressures. To improve margins,“staff costs have been brought down to Rs. 50 lakhs and we will continue cost rationalization in Q4 also”. Management aims to rationalize headcount and exit lower end projects in both verticals.

The headline numbers show some recovery...

TeamLease clocked a revenue growth rate of 15.3% YoY, moving from Rs. 1,172 crore in Q3FY19 to Rs. 1,351 crore in December quarter FY20. Operating profit stood at Rs. 27.5 crore for the quarter against Rs. 24.5 crore in the same period,  last year growing 12% YoY. Operating margin declined 6 bps YoY reported at Rs. 2% in Q3FY20 against 2.1% in the corresponding quarter FY19. PAT stood at Rs. 26 crore in Q3FY20 versus Rs. 25.2 crore in the same period, last year.

TeamLease.com saw one lakh job postings and 20 lakh applications in Q3FY20. Total employee/ trainee headcount is about 228,000 as on  December 31, 2019 with a quarterly net addition of 5,000 resources in Q3FY20. Commenting on Q3FY20 results, Mr. Ashok Reddy, MD, TeamLease Services said, “We have acquired a 74% stake in IMSI Staffing to get an entry into the infra staffing vertical and strengthen our specialized staffing offerings. We continue to drive growth while maintaining the realizations in staffing business”.

...but a closer analysis indicates underwhelming December quarter

The Indian staffing industry is valued at around Rs. 33,000 crore, growing at roughly 15-20% over the past five years driven by the formalisation agenda of the Government of India. Driving people growth in over 65 industries, the staffing industry provides temporary as well as permanent staffing solutions.

TeamLease, a market leader in the staffing industry has hired a person every 5 minutes since its inception. It is one of the largest temporary staffing companies with over 1000 temporary staffing clients, provides specialized staffing services to the IT and telecom industry, hiring services to freshers through its portal Freshersworld and offering high tech multi-user SAAS solutions through one of its latest acquisitions, Avantis Regtech Private Ltd.  

TeamLease has been reporting lacklustre growth over the past 3-4 quarters. In the December quarter FY20 as well, there has been margin deceleration and mundane bottom-line growth. Overall there have been 5,000 resource additions - 2,000 in general staffing after two quarters of downturn, 1,000 addition in NETAPP and 1,800 addition in specialized staffing. Mr Ashok Reddy said, “Overall there is positive trajectory compared to previous Q2 but YoY is low. This sequential positive mode of Q3 should continue in Q4FY20”.

The management acknowledged that the company did not witness a strong festive Q3 similar to the previous year and outlined three main reasons for lower growth. Firstly, a lack of aggression, investment in teams that increased internal cost, and holding on to price rather than reducing it to garner projects limiting its growth momentum. Coming to margin performance, a provision of around Rs. 1 crore pertaining to a particular client during the quarter impacted margin expansion in Q3FY20. To improve margins, Mr. Reddy said, “Staff costs have been brought down to Rs. 50 lakhs and we will continue cost rationalization in Q4 also”. 

NBFC, manufacturing and telecom were laggards whereas banking, eCommerce and digital wallet players have been exhibiting growth. Though general staffing revenues which contribute 90% of total revenues grew 15% YoY, margins declined from 2.1% a year ago to 1.6% in Q3FY20. For specialized staffing mainly constituting IT and telecom, revenues have declined 3% sequentially and going forward, management aims to rationalize headcount and exit lower end projects in both verticals.  

Apart from general staffing and specialized staffing segment, the HR services segment is also being refigured by the company by tapering off government training business due to collection issues, and focussing on a corporate training programme to augment its revenue growth trajectory. 

TeamLease has given guidance of 16% revenue growth and margins between the range of 2-2.1% for general staffing. Associate addition is guided at 10% growth and margins on PBT for IT is expected between 9.5% - 10%, for telecom, 2-3% range and for recently acquired IMSI, 10-11%. Markets are not enthused despite management optimism, and the stock has fallen since its Q3FY20 result announcement.

TeamLease Services Ltd. has lost -35.21% in the last 1 Month
TeamLease Services Ltd.    
04 Feb 2020, 05:33PM
1535.35
-0.91%
TeamLease Services Ltd.    
30 Jan 2020
1535.35
-0.91%
Motilal Oswal
30 January 2020 Robust organic revenue growth (+31% YoY) was almost entirely driven by general staffing. However, this has not translated into equally strong growth in EBITDA/PAT. Lower mark-ups in the recent contracts have been driving a secular decline in general staffing margins over the past few quarters. P/E multiples at a steep discount to Teamlease (57%), coupled with some of the recent positive developments, have led to a sharp re-rating (22%) over the past three months. Organic/overall revenue increased 31%/36% YoY, largely led by general staffing segment, while most other key segments remained modest at best Excluding the impact of Ind-AS 116 and the inorganic contribution from Allsec Technologies, EBITDA growth was weak at 5% YoY. Margin contraction within general staffing was the key overhang on overall margins. This could have been driven by lower mark-ups in large deals. Loss run-rate at Monster came down QoQ (EBITDA margin of -10% v/s -18% in 2Q).
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TeamLease Services Ltd. has lost -38.27% in the last 3 Months
TeamLease Services Ltd.    
29 Jan 2020
1535.35
-0.91%
HDFC Securities
We like company's low risk business model (non outcome based), focus on scaling core associates and diversified client base across sectors. There is scope for margin expansion through productivity benefits and better business mix. Teamlease's ability to grow ~15-20% organically, focus on driving productivity through automation, lower funding exposure, domestic focus and high management pedigree commands premium valuations vs. peers. We expect revenue/EBIT/PAT to grow at 19/21/17% CAGR over FY19-22E. Risks include adverse macros, discontinuation of Sec 80JJAA tax incentive and delay in tax refunds. We maintain BUY on Teamlease based better than expected revenue growth in 3QFY20. Growth in core business will continue based on higher open positions and recovery in NETAP. Margin expansion was lower than estimate but cost cutting initiatives, improving productivity and change in business mix will lead to margin expansion. Our TP Rs 3,444 is based on 40x (5Y average 1-y forward P/E of 35x) Dec-21E EPS.
TeamLease Services Ltd. has lost -49.10% in the last 6 Months
TeamLease Services Ltd.    
29 Jan 2020
1535.35
-0.91%
ICICI Securities Limited
NETAP addition to see better trajectory in coming quarters Revenues from general staffing (including NETAP) grew 6.8% QoQ (14.5% YoY) driven by a mix of associate growth (1.5% QoQ) and average realisation. Lower number at associate addition on a QoQ basis is due to weakness in addition in NETAP headcount (led by slowdown in manufacturing) and attrition in associates (in FMCG and retail) in December, which was usually a February phenomenon. As per the management, weakness in NETAP has bottomed out and would gradually see an...
TeamLease Services Ltd. has lost -35.21% in the last 1 Month
TeamLease Services Ltd.    
28 Jan 2020
1535.35
-0.91%
TeamLease Services Ltd.    
28 Jan 2020
1535.35
-0.91%
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