Last Updated: Saturday, February 6, 2016

TeamLease IPO: Should you book listing gain?

Teamlease Services Ltd has recently issued its IPO which has got excellent response in primary market with 66 times subscription. The company is going to be listed soon on both stock exchanges, those who have successfully applied for this IPO must read this post on "TeamLease IPO: Should you book listing gain?"

About TeamLease Teamlease Services Ltd

TeamLease IPO_book_listing-gain_66 times_subscribed_strategy-valuation_company_business-hr-money-n-business
Teamlease Services Ltd is one of India’s leading human resource service providers. Teamlease Services in the organized segment include a vast range of human resource services to a number of industries including consumer durables, BFSI, e-commerce, chemicals, manufacturing, media and telecom, retail,pharmaceuticals and healthcare sectors. While staffing business is the principle source of revenue which is almost 98.8% of its total revenue; while HR services accounts for the balance. Teamlease has a market share of 5% in terms of Associate Employees, and had 1,04,946 Associate Employees engaged mostly in sales, logistics and customer service functions. The company has currently 1,252 clients with 93.21% of total revenues coming from repeat customers. Five of the top ten clients by revenue in FY15 have been with TeamLease for a term exceeding 6 years. Teamlease's major competitors are Randstad, Adecco, Kelly services.

About TeamLease IPO

Teamlease Services Ltd recently issued its IPO;
  • Issue Opens 2-Feb-16, 
  • Issue Closes 4-Feb-16, 
  • Price Band Rs785-850

TeamLease IPO: Should you book listing gain?

IIFL neutral on valuation

Teamlease at the upper band of issue (Rs. 850), is priced at 53x P/E of FY16 Earning and 0.5x EV/sales. Valuation wise Teamlease is at a significant premium to its global peers such as Randstad, Adecco, Kelly services which have a comparatively better margin profile. ROE and ROCE is at 23% and 21.6% respectively. In spite of the expected double digit growth in topline, Some of the brokers like IIFL do not expect the significant improvement of its profitability in the coming years, so IIFL is neutral on the issue.

Click here for the detailed report in pdf by IIFL.

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