TeamLease Services Ltd. share price forecast

Colgate Palmolive: Colgate reported a miss on our net revenue and EBITDA estimates. Net revenue grew by 3% YoY (HSIE 5%), at a 3% three-year CAGR. Volume declined ~3% YoY, a three-year CAGR of -1% vs. HUL's 2%. The deceleration was largely industry led rather than market share loss. Toothpaste was the most impacted as compared to toothbrush and personal care. Rural demand was sluggish; a trend we expect would continue in the near term. GM contracted 283/51bps YoY/QoQ to 66.3%, in line with our estimates. EBITDA margin, at 27.2%, saw a higher contraction of 325bps YoY due to continued investment in brand building, while A&P spends were at ~14% of revenue. The current inflationary and rural pressures are impacting the already slow-growing oral care category. Demand trend would sustain a similar trajectory in the near term, while margin recovery is expected. We value Colgate at 36x P/E on Jun-24E EPS to arrive at a TP of INR 1,600. Maintain ADD. Relaxo Footwears: Relaxo reported an underwhelming print in Q1FY23. Revenue grew 34.2% YoY to INR6.67bn in Q1 (three-year CAGR: 1%; HSIE: INR6.84bn). Three-year volume/net realisation CAGRs are estimated at -9/+11% a function of (1) increasing skew of closed footwear in the mix and (2) impact of H2FY22 price hikes hitting the P&L. Profitability remains below expectation courtesy (1) INR15.9mn inventory loss impact due to a fire outbreak at its Haryana warehouse and (2) general inflation in other overheads. We've cut our FY24/25 EPS estimates by ~5/4% to account for lower profitability. Our DCF-based TP stands...

IRB Infra: IRB reported revenue/EBITDA/PAT of INR 14.3/6.4/1.7bn, beat/miss/beat on our estimates. EBITDA margin was 44.8%, missing our estimate on account of preferential allotment issues expenses and cost booked on Panaji Goa claims. Higher inflation, however, benefitted BOT projects with tariff revised upwards by 10%. This will also result in lower losses for private InvIT expected at INR 1.5bn in FY23 (INR 4bn in FY22). In the quarter, Fitch upgraded the long-term rating to BB+ from BB. This will expectedly reduce the overall interest cost by 1.1bn annually. IRB expects more execution from HAM projects in FY23 and, consequently, the EBITDA margin is expected to come down to 24%. IRB expects to transfer projects worth INR 25bn (in equity value) to public InvIT by the start of the next calendar year. The concept paper is expected in coming months. We maintain ADD and reduce SOTP TP to INR 279/sh to account for the lower EBITDA margin, owing to commodity inflation and change in mix towards HAM. Galaxy Surfactants: Our BUY recommendation on GALSURF with a price target of INR 3,295 is premised on (1) stickiness of business, as over 50% of the revenue mix comes from MNCs and (2) stable EBITDA margin, since fluctuations in raw material costs are easily passed on to customers. Q4 EBITDA/APAT were 115/151% higher than our estimates, owing to a 7% rise in the revenue and lower-than-expected raw material cost (courtesy inventory gains), but were offset by lower-than-expected other income and higher-than-expected tax outgo. Multi Commodity Exchange: We maintain BUY on...

all companies in NIFTY IT Index, several mid-cap, small cap IT firms and new age internet players. Management commentary across companies indicate that strong demand environment is expected to continue over medium term and revenue growth is no longer contingent on winning large deals. Pricing environment has also improved. Additionally, companies are doing aggressive fresher hiring resulting in pyramid balancing which will provide considerable margin tailwinds in FY23....

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quarters and is now at 387 (vs 365 in 2Q22 and ~260-270 pre-covid) We upgrade our rating to ACCUMULATE (earlier: REDUCE) given 1) Teamlease (TEAM) is gaining market share (32% YoY growth in associate addition in 9MFY22) in strong demand environment where intent of hiring continues to improve, 2) strong operating metrics in terms of new logo additions and improving FTE productivity, 3) Yield shortfall of 1% in PF trust amounting to ~Rs.15 Cr is provided for in Rs.75 Cr provision made in Q2FY22...

across all three segments General staffing grew 10% QoQ, Specialized staffing services grew 17% QoQ and Other HR Services grew 13% QoQ. Net head-account addition was strong in BFSI, Consumer, e-commerce, and tele tech cohorts, while sectors which were worst affected by the pandemic are making a comeback. Consolidated EBIT margin came at 1.5%, was flat QoQ...

TEAM delivered a strong operational performance in 2QFY22, with revenue up 10.7% QoQ on broad based growth across all three verticals. It also added 25k associates (record high) in 2Q, benefitting from a strong demand environment as well as seasonality and flow through from a COVID-impacted 1QFY22. EBITDA margin inched up by 10bp QoQ to 2.2% on strong growth in the Specialized Staffing business and partial drawdown in General Staffing,...

Key beneficiary of under penetrated temporary staffing market (0.5% in 2015 vs. global average of 1.7%) and formalisation (16% in 2018) The pandemic has forced enterprises to variablise its cost structure leading to increased outsourcing of flexi staffing. Hence, we expect overall revenues...

TEAM's operating performance was a beat on our estimates, with total revenue increasing 2.7% QoQ. Revenue growth was led by 17%/22% QoQ growth in Specialized Staffing/Other HR Services, offset by a 1% growth in the General Staffing business. Margin in 1QFY22 inched up by 20bp QoQ to 2.1%, led by strong growth in the Specialized Staffing business and partial reversal in provisions in Other HR Services. It reported an adjusted PAT of INR243m, implying a PAT margin (in line) of 1.8%. The management remains optimistic about a recovery in long term growth....

placed to benefit from an economic recovery going forward followed by catalysts such as 1) Improving business mix, 2) Recovery of growth, 3) Pick up in decision making process, 4) Strong return ratios. Teamlease (TEAM) reported miss on revenue, +2.7% QoQ (Ple: 4% QoQ) as...

Teamlease Services: Teamlease registered strong growth (+5.1% QoQ) for the second consecutive quarter, in line with our estimate. Growth in core staffing (+5.5% QoQ, 91% of revenue) was led by improved hiring activity in e-commerce, essential retail, BFSI and manufacturing verticals. Stressed verticals like hospitality, retail and travel are not showing signs of recovery though. The core associate headcount growth has been robust (+7.5% QoQ, crossed the pre-COVID level), led by NETAP (+17.5%). The recovery which started in 2HFY21 will be impacted in 1QFY22E by the second wave, but clients are showing resilience and ~80% of the associates being hired are for essential services. Margin came in lower than expected as higher discounts were given to clients, leading to lower realisation (-3.5%), offset by enhanced productivity (+5.4% QoQ). Cash generation has also improved due to lower withholding tax, tax refunds, and lower DSO days (YoY). Going ahead, we expect gradual margin expansion with recovery in growth (by 2HFY22E), improved productivity, better business mix (higher-margin specialised staffing) and low costs of hiring. We cut our EPS estimate by -5.5/-3.4% for FY22/23E to factor in the impact of the second wave of COVID. Our target price of INR 3,950 is based on 38x FY23E EPS (five-year average PE of ~35x). The stock is trading at a PE of 50/35x FY22/23E. Maintain BUY. Max Financial: MAXL delivered an APE growth of 36/57% YoY/QoQ (6% miss vs. estimates). VNB margin for the full year came in at 25.2% (+358bps YoY), led by higher share of NPAR business and better fixed...

TEAM delivered an in line performance in 4QFY21, with total revenue increasing 5% QoQ. Revenue growth was led by the General Staffing business (+5.5% QoQ) general staffing and NETAP trainee headcount increased by 16k (+8% QoQ). Margin in 4QFY21 were stable, despite an impressive improvement in FTE productivity (352 v/s 334 in 2Q), led by continued customer discounts. It reported an adjusted PAT of INR268m, implying a PAT margin (in line) of 2%. TEAM remains optimistic about a recovery in long term growth. We expect...

Teamlease (TEAM) reported slight miss on revenue, +5% QoQ (Ple: 6.5% QoQ) due to impact of covid in March 21. Growth was led by strong General Staffing and NETAP trainees' headcount, +8% QoQ, 4% YoY surpassing precovid levels. Specialized staffing declined by 3.3% QoQ due to reduction of...

We expect revenues to be impacted in Q1FY22E mainly due to lockdown. However, we expect revenues to improve from Q2FY21E onwards led by a gradual recovery in the economy and improved traction in healthcare, education, e-commerce, manufacturing, essential retail and IT. This, coupled with addition of new logos and large ticket customer are expected to further drive general staffing revenues. In addition, from a structural perspective, we believe that since the pandemic has forced enterprises to variablise its cost structure, it will lead to higher outsourcing of labour making flexi...

Formalisation, market share gains key long term drivers We believe the introduction of labour laws and e-invoicing could boost formalisation of the economy. We believe Teamlease will be a key beneficiary of the same. In addition, increase in temp staffing, consolidation of market and market share gains are other long term revenue drivers for the company. Further, gradual recovery in economy and improved traction in healthcare, education, ecommerce, manufacturing, essential retail and IT will further boost company's revenues. This, coupled with addition of new...

The company added ~7000 employees in NETAP, which means there are green shoots in manufacturing and auto. TLS expects improved demand from these two sectors, going forward. In addition, the company is seeing improved traction in consumer goods, e-commerce, telecom and some financials. This, coupled with addition of 24 new logos in the quarter, addition of large ticket customer and TLS' commentary of exiting FY21E headcount at higher levels than FY20, reversal of discounts keeps us positive on general staffing revenue growth (11% CAGR in FY20-23E). In specialised...

The General Staffing headcount remained flat on a sequential basis and was better than our expectation. Impressively, realizations remained stable despite the pressure on markups in the industry. Furthermore, FTE...