Q3FY24 Review: TeamLease Services: Better-than-expected 3Q; maintaining estimates

31 Jan 2024 , 12:26 PM

TeamLease’s (TEAM) EBITDA, after removing estimated one-off gains of ₹11 Million, grew 11% over the year-ago quarter, above estimates. The beat was largely led by better revenue. Reported PAT grew 7% over the year-ago qurter. On the earnings call, management indicated that the outlook for Q4 for the general staffing segment remains healthy. Weakness in IT hiring has been partly offset by traction in the Global Capability Centre (GCC) space but margin recovery in the specialized staffing segment will be gradual. Analysts at IIFL Capital Services have largely maintained their PAT estimates as revenue upgrade is offset by lower margin and other income. They estimate EPS to be flat year-on-year in FY24 followed by 30% CAGR over FY24-26 assuming margin recovery across segments. It trades at a significant premium to peers despite slightly better return ratios.

In IIFL’s view, 1YF PE of 33x largely prices in the healthy medium-term outlook. Analysts at IIFL Capital Services have raised their Target Price from ₹2,550 to ₹2,700 on rolling forward to March 2025.