MOSL: TEAMLEASE SERVICES (Buy)-Muted quarter, provisioning far sighted; Miss on all fronts
TEAMLEASE SERVICES: Muted quarter, provisioning far sighted; Miss on all frontsTEAMLEASE SERVICES: Muted quarter, provisioning far sighted; Miss on all fronts(TEAM IN, Mkt Cap USD0.7b, CMP INR2781, TP INR3330, 20% Upside, Buy)
** 2QFY20 revenue at INR12.7b grew 16.2% YoY (v/s est. 23.5%) while EBITDA at INR245m grew 2% YoY (v/s est. 49%). PAT at INR202m declined 20.1% YoY (v/s est. +28%).
** General staffing associates grew by 4,415 QoQ (14% YoY) to 165,029, below our est. of 7,700 additions QoQ. Specialized staffing saw a decline of 309 associates QoQ to 6,549 (+8% YoY), below our est. of 6,975. The decline in specialized staffing headcount was led by reduction in Telecom sub-segment associates from ~3,700 to 3,500.Revenue from Other HR services declined 25% YoY due to planned reduction in exposure to government mandates.
** EBITDA margin at 1.9% was below our est. 2.7%. Miss was led by lower-than-expected recovery in government provisioning (INR60 set in last quarter), steep reduction in higher margin NETAP employees and increase in other expenses on multiple fronts. EBITDA margins for General Staffing/ Specialized Staffing/Other HR Services stood at 1.8%/6.3%/-0.6%, lower by 10bp/100bp/11.2pp sequentially.
Teamlease Services Ltd. Teamlease Services Limited is an India-based company engaged in employment activities. The Company operates as a temporary staffing company and provides human resource services to various industries. Its segments include Staffing Operations, Recruitment Operations and Training Operations. Its services include Temporary Staffing or Temping, Recruitment Services, Regulatory Compliance Services, Retail Learning Solutions (RLS), Institutional Learning Solutions (ILS), Apprenticeship Program (NETAP), TeamLease Skills University and Payroll Processing. It works across industry verticals, including consumer durables, retail, telecom, chemical, e-commerce, pharmaceuticals and healthcare sectors. Its permanent recruitment business is supported by its Candidate Lifecycle System technology platform. It offers training programs in information technology (IT), finance and retail. Its institutional learning solutions business provides skill development services under various Government schemes.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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