TeamLease Services IPO - Worth teaming-up with (Apply)

Review By Dilip Davda on Jan 27, 2016

TeamLease Services Ltd (TLSL) is one of India's leading providers of human resource services in the organized segment delivering a broad range of human resource services to various industries with a vision of putting India to work.

TLSL’s services span the entire supply chain of human resources in India, covering aspects of employment, employability and education that include temporary staffing solutions, permanent recruitment services and regulatory consultancy for labor law compliance. Its employability offerings include different types of learning and training solutions, including retail learning solutions, institutional learning solutions and enterprise learning solutions. It had 1252 customers and 104,946 Associate Employees as of November 30, 2015, making the company one of India's leading people supply chain companies. All of its businesses operate on an asset-light model with low capital expenditure requirements. Company’s core business is providing staffing solutions across industry sectors and diverse functional areas. The majority of its Associate Employees are engaged in sales, logistics and customer service functions. TLSL focuses on people, processes and technology to enhance business productivity by enabling its clients to outsource their staffing requirements and allowing them to focus on operating and growing their core businesses. Company’s revenue comes from 95% of repeat contracts and the rest from new ones and other activities. It has created a niche place in "Staffing infrastructure". Overall 29% of the workforce is outsourced and of that roughly 1% is in the formal sector. TeamLease has a 5-6% share of the formal portion of the business. Ongoing labor reforms with more transparency augur well for organized players like TeamLease, who is confident to raise its market share in double digits in coming few years. All staffing is placed on a yearly contract basis with employers and the associates are taken on nine month’s contract. Billing for entire CTC including statutory dues and TLSL’s margins are done by the company that generates its revenue model.

India is the second largest labour market of the world and has massive growth potential for flexi-staffing. TLSL that is leader in India aims to be the biggest player globally in this segment. In last five year's TLSL has marked Associate growth of 17% and revenue growth of 32%.

To part finance the up gradation of existing IT infra, working capital needs and acquisition and other strategic initiatives, the company is offering around 19.11 to 17.65 lac fresh equity shares of Rs. 10 each (based on lower and upper price band) along with offer for sale of 3219723 equity shares via book building route in a price band of Rs. 785-850. Minimum application is to be made for 15 shares and in multiples thereon, thereafter. Issue opens for subscription on 02.02.16 and will close on 04.02.16. BRLMs to this issue are IDFC Securities Ltd, Credit Suisse Securities (India) Pvt Ltd and ICICI Securities Ltd. Karvy Computershare Pvt Ltd is the registrar to the issue. Post allotment, shares will be listed on BSE and NSE. The aggregate size of the offer is Rs.  402.75 cr. To Rs. 423.68 cr.  based on lower and upper price band. It issued equity at par between 2003-2008 and in November 2009. It also issued equity at a price of Rs. 2540.60 to Rs. 8805.10 per share (based on Rs. 10 paid up value) between 2009 to 2011 and issued bonus in the ratio of 29 shares for every 1 share held in July 2015. Its current equity capital of Rs. 15.33 crore will stand enhanced to around Rs. 17.00 crore.

On performance front, company's top line grew from Rs. 698.32 crore (FY2011) to Rs. 2018.46 crore (FY 2015) and its bottom line that was in red till FY 2013 turned positive for last two fiscals with a net profit of Rs. 17.86 crore (FY14) to Rs. 29.69 cr. (FY 15). For six months ended 30.09.15 it has posted net profit of Rs. 10.97 crore on a turnover of Rs. 1215.79 crore. If we attribute these earnings on annualized basis on fully diluted equity post IPO, then the asking price is at a P/E of  60 plus. This IPO is from the first mover in the staffing segment with no peers to compare with.

Merchant bankers have mixed trends for their past mandates.


Conclusion / Investment Strategy

Issue is likely to create fancy being first mover IPO in the Staffing segment that has bright prospects ahead. Hence this IPO is worth teaming up with for medium to long term.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Jan 27, 2016

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at its own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

TeamLease Services IPO FAQs

  1. 1. Why TeamLease Services IPO?

    The initial public offer (IPO) of TeamLease Services Ltd offers an early investment opportunity in TeamLease Services Ltd. A stock market investor can buy TeamLease Services IPO shares by applying in IPO before TeamLease Services Ltd shares get listed at the stock exchanges. An investor could invest in TeamLease Services IPO for short term listing gain or a long term.

  2. 2. How is TeamLease Services IPO?

    Read the TeamLease Services IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. TeamLease Services IPO what should investors do?

    TeamLease Services IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the TeamLease Services IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is TeamLease Services IPO good?

    Our recommendation for TeamLease Services IPO is to subscribe.

  5. 5. Is TeamLease Services IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the TeamLease Services IPO.

  6. 6. When will TeamLease Services IPO allotment status?

    The TeamLease Services IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit TeamLease Services IPO allotment status to check.

  7. 7. When will TeamLease Services IPO list?

    The TeamLease Services IPO will list on Friday, February 12, 2016, at BSE, NSE.








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