TeamLease Services Ltd. share price forecast

Kajaria Ceramics: We maintain ADD on Kajaria Ceramics (KJC) with an unchanged target price of INR 1,310/share (21x its Mar'25E consolidated EBITDA, 33x implied PE). Kajaria's Q1FY24 result was in-line with our estimates. Its revenue grew by 6% YoY (volume-led). EBITDA grew by 10% YoY (fuel price cool-off). Fuel prices have cooled by 15% QoQ in Q1FY24 to INR 39/SCM (at the same level in July-23). EBITDA margin grew 70/130bps YoY/QoQ. KJC remains confident of delivering 13-15% tiles volume growth in FY24. It expects EBITDA margin to recover to 14-16% in FY24 owing to a cool-off in fuel prices. In the bathware segment, too, it expects strong 30% revenue growth. Teamlease Services: Teamlease reported healthy revenue growth (+7.1% QoQ) while margins continued to be under pressure. The closure of the NEEM program (higher margin), wage hike for core employees' and flat PAPM impacted margins in the quarter. The general staffing volume growth was led by strong hiring in retail, BFSI, industrial and consumer verticals. The degree apprenticeship (DA) headcount dipped and is likely to bottom out in Q2 while volume growth will revive in 2HFY24E. Specialised staffing growth was impacted by slow hiring activity in the IT sector but GCCs witnessed traction. The growth will be led by (1) continued volume growth in the general staffing business, (2) new logo additions improving visibility, (3) recovery in DA volume, and (4) growth in specialised staffing, led by IT hiring uptick and captive strength. The EBITDA margin is expected to improve in 2H, led by a pick-up in...

Devyani International:Mirroring its sister franchisee, Devyani reported an operationally weak Q4FY23 performance on moderating SSSG. Revenue growth of 28% YoY was led by 33% store addition. SSSG was weak for both KFC/PH at +2/-3% (Sapphire: +2/-4%) due to a tough demand environment. Negative oplev due to weak SSSG led to margin pressure across the business. Devyani's KFC/PH ROM fell 220/490bps QoQ to 17.5/9.3% (Sapphire 110/530bps to 19/8.6% JUBI 230bps to c.18%). Management has maintained its medium-term guidance of mid-single-digit SSSG growth and 300 stores addition. In the near term, we expect decelerating trend to continue with sustained pressure on operating margin. We maintain our EPS estimates and value Devyani at 50x P/E on Jun'25 EPS to arrive at a TP of INR 115. Maintain REDUCE. LIC Housing Finance: LICHF reported a mixed set of results with sharp reflation in margins driving a beat on our earnings estimates, partly offset by muted disbursals in individual home loans and a rise in early delinquencies. NIMs reflated sharply (50bps QoQ) to 2.93% (FY23: 2.41%), primarily driven by improving spreads (210bps loan repricing benefit during FY23). While the GS-III declined sequentially by ~40bps, early delinquencies shot up, and are likely to stabilise by Q1FY24, as guided by the management. Disbursals were muted (-17% YoY, -0.5% QoQ), as weakness in individual home loans (-24% YoY) was offset by strong traction in project loan disbursals. LICHF is likely to continue facing a trade-off between growth and margins in an elevated competitive intensity environment. We marginally revise our FY24E earnings estimates upwards to...

Indraprastha Gas: Our BUY recommendation on Indraprastha Gas (IGL) with a target price of INR 515 is based on (1) robust volume growth at ~14% CAGR over FY22-25E; (2) regulatory support from the government to curb pollution in the Delhi/NCR region; and (3) a strong portfolio of mature, semi-mature, and new geographical areas. Q3FY23 EBITDA was at INR 4.3bn, which came in above our estimate; however, it declined 9% YoY and 19% QoQ, owing to higher input gas cost. APAT was at INR 2.8bn, above our estimate, and was down 10% YoY and 33% QoQ. Reported volume at 8.12mmscmd (+6% YoY). Motilal Oswal Financial Services: MOFS printed capital market revenue (ex-WM) 11% ahead of the estimate, driving capital markets APAT to INR1.4bn (+2% QoQ). The AMC (ex-WM) APAT was in line with the estimate at INR553mn (-6% QoQ); however, the PMS continued to face redemptions. The APAT (ex-MOHFL) clocked in at INR1.9bn (-13% YoY), driven by a sharp beat in broking NII, primarily on account of a sharp jump in customer funds in brokerage accounts. We upgrade our earnings estimates for FY23E/FY24E/FY25E by 10-12% each to factor in a sturdy float book and all-time high derivatives volumes; however, we trim our target multiple for the broking business (from 14x to 12x) and the AMC business (from 20x to 14x) due to high uncertainties in capital markets and continued redemptions in PMS business. We maintain ADD with a revised target price of INR985 (12x/14x Sep-24E broking/AMC APAT + 0.5x/0.5x for Sep-23E treasury/MOHFL). Teamlease Services: Teamlease reported in-line...

Prince Pipes: We maintain our BUY rating on Prince Pipes, with a revised lower target price of INR 645/sh (18.5x its Sep-24E EBITDA). We continue to like Prince for its large product portfolio, robust pan-India distribution, and low exposure (~30-35%) to price-sensitive agri/rural markets. Prince Pipes reported weak performance in Q2FY23 as it delivered both a YoY volume decline (-10%) and an EBITDA loss of INR 113mn (OPM: -1.8%). The performance is adversely impacted due to continued dealer destocking and sharp inventory lossesINR 0.8-0.9bn or INR 22/kg in Q2FY23! Teamlease Services: Teamlease reported lower-than-expected revenue growth of 4% QoQ and margin expansion of 27bps (on a lower base) lagged estimates. The general staffing volume growth of 2.3% QoQ was the lowest in the last four quarters and compliance-related issues impacted the NETAP trainee's growth. The hiring activity remained stable in key verticals like BFSI, consumer and e-commerce while a slowdown was witnessed in emerging verticals like Fintech and Ed-tech. The specialised staffing was impacted due to one client-specific issue in Telecom vertical while IT staffing was stable. Core staffing and HR services will continue to witness growth while NETAP/specialised staffing will take 1-2 quarters to recover. We expect gradual improvement in core staffing margin supported by better markup, higher associate/core ratio and cost savings. HR services/specialised staffing margin target is ~8-9%. We cut our revenue estimate by ~3-4% and cut EPS estimate by ~11/7% for FY23/24E due to revenue and margin miss. We maintain BUY with TP of INR 3,450 based on 32x FY24E EPS (vs...

TeamLease Services (TEAM) reported revenue of Rs19.55bn, modest growth of 4% QoQ in Q2FY23. General staffing revenue (Rs17.8bn) growth was soft at 4.7% QoQ led by moderation in headcount addition.

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,...