Motilal Oswal has given Neutral recommendation for TeamLease with a target price of Rs. 3670 in its research report issued on May 19, 2022

Motilal Oswal’s research report on TeamLease

TEAM delivered a strong operational performance in 4QFY22, with revenue up 3% QoQ on broad-based growth across verticals. It also added ~12k associates after a very strong hiring in recent quarters, benefitting from a strong demand environment. EBITDA margin rose 12bp QoQ to 2.26% due to higher core employee addition. The management remains positive on its growth outlook, as supportive macro and new logo additions boosts demand for associates. We expect TEAM to report good revenue growth in all verticals on continued improvement in General Staffing, a pickup in HR Services, increased manpower demand, and higher margin replacements in the IT Staffing business.

Outlook

We are lowering our FY23E/FY24E Eestimates by -7.4%/-7.6% to factor in income tax expenses. Our TP of INR3,670/share implies 30x FY24E EPS.

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