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Investing.com - Investec (LON:INVP) upgraded TeamLease Services Ltd (NS:TEAM) from Hold to Buy on Tuesday, while lowering its price target to INR2,250.00 from INR2,905.00.
The staffing company reported revenue growth of 1.2% quarter-over-quarter, which was 1.9% below estimates. Despite this, TeamLease delivered 12% year-over-year revenue growth and 37.8% year-over-year EBITDA growth.
Investec believes the drag on growth and EBITDA has bottomed out and expects an improving trajectory going forward. The firm noted TeamLease has INR3 billion in net cash and potential GST refunds of approximately INR3 billion, which together account for about 20% of the company’s market capitalization.
The research firm cut its estimates based on lower growth and margin assumptions. Investec introduced FY28 earnings per share estimates of INR116.2 and rolled over its valuation to Q2FY28 TTM.
The target price-to-earnings multiple of 22x remains unchanged, which Investec notes is one standard deviation below TeamLease’s five-year average P/E ratio.
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