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Buy TeamLease Services; target of Rs 2500: Motilal Oswal

January 03
14:42 2018

Motilal Oswal’ research report on TeamLease Services

In the backdrop of a limited listed history, lack of comparables to take cues from and the yet -developing understanding of underlying business dynamics, we add context and perspective to existing valuation metrics. The exercise leads us to believe that an extension of the time horizon coupled with a natural evolution of the business make a case for significant valuation triggers from current levels –  in line with the benefits of a long -term growth story unfolding. Su stained superiority of financial performance because of industry trends, business model and operational excellence continue strengthening our positive long -term view on the stock.

Outlook

We value TEAM using DCF to reach a price target of INR2,500 (24% upside ); our price target has increased by 9 %, led by an upward adjustment to  our profitability estimates . At 3 1/23x FY1 9/20 E earnings, valuations are rich , living  up to our  growth  expectations – 23% revenue CAGR , 33%  EBITDA CAGR, and 41%  PAT CAGR over  FY18 -20. Sustained superiority of financial performance because of industry trends, business model and operational excellence continue strengthening our positive long- term view on the stock. Buy.

For all recommendations report, click here

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