Team Lease IPO
Team Lease Services is a giant in recruitment services and consultation. They are in outsourcing staff for big names. The company is the largest company for outsourcing temporary personnel to companies that started in 2002. With the success that the company has gained in the past few years. It is going to launch its shares in the capital market on 2nd February with its IPO. The price of each share will be varying from Rs. 785 to 850 .Every applicant must apply for at least 15 shares. The estimated capital to be gathered by the company is somewhere between Rs. 254 to 270 crore after this. It is alluring for all the investors to explore whether the company is worth the share value and investment or not.
Business Overview of Team Lease Services Limited
Team Lease Services was established in 2002 and since then there has been a successful story year after year. The company mainly provide skilled human resource across various sectors. It provides employees to companies on contracts and even cater recruitment solutions for permanent employees hiring. Team Lease also provides consultancy services to big companies of various service sectors. Besides human resource management the company has various training solutions also to offer that cover various vertical sectors. It has diversified its domain in all these years and is continuously developing forward. With diverse offerings the company surely differentiates itself from others in the league.
Team Lease Services IPO Review and Recommendation
According to the statistics and study on 30th November 2015 the company had more than 1 lakh employees which embarks it as one of the biggest human resource supply chain companies of India. It has served around 1252 clients that includes giants across all industrial sectors and has a well knitted network of nine offices. There are 1218 employees on the payrolls of the company.
Features of Team Lease Services IPO
The issue will open on Tuesday February 2nd, 2016 and will close on Thursday February 4th, 2016. There will be 100% Book Building. The estimated issue price/ share is Rs.785–Rs.850. The face value of each share will be Rs.10.
Each equity investor needs to invest in minimum 15 shares and then it will be in multiplication of 15. Hence, the minimum order Value will be Rs.11, 775 to Rs.12, 750. The complete issue size is expected between Rs.252 crore to Rs.274 crore.
The shares will be listed in the market (both Bombay Stock Exchange and National Stock Exchange). The Lead managers are IDFC Securities Limited, Credit Suisse Securities (India) Private Limited and ICICI Securities Limited.
Objectives of Team Lease Services IPO
Through IPO the company would offer around 3,219,723 Equity Shares by the name of Team Lease and the funds from these shares will be allocated in the following manner:
It will be optimally utilized for fulfilling the need of increasing working capital that is used in operations.
It will be also be used by Team Lease for acquisitions and other strategies that have been laid by the company.
Further, the company also will upgrade the present IT infrastructure and also the funds will be used for other planning purposes like brand promotion and team building within the company.
The most important of all is that the recognition that the company will earn after being listed in the IPO.
Allocation of Team Lease Services IPO
From the complete issue size 75% will be allocated for Qualified Institutional Buyers (QIB), 15% for Non‐Institutional Buyers (NIB) and 10% for Retail Investors.
The Financial Road Map of Team Lease Services Limited
The CAGR of Team Lease is 23.91% from the last 5 years, from 2011 to 2015. In 2011 the company had total sales of Rs, 687 and it increased to Rs. 2,007 crore in 2015.
The EBIDTA is also negative from 2011 to 2013. But in the year 2104 and 2015 the company has earned profits. The margin of EBIDTA is very less of almost 1%. If The EBDITA increases the company will surely embark a successful journey in the coming years.
The Profit after tax to the total sales ratio is only 1% in the last 2 years. The company has only earned profits in the last 2 years and earlier it was in loss. Hence it is growing now.
The income on the company’s net worth was 20% in the year 2015 but in the last 6 months it has has been reduced to 7%.
The Diluted EPS is of Rs.19.36 has been reported in the company and during the end of 30th September the eps remained Rs.7.16 per share.
|Turn-on Points of Team Lease Services IPO||Turn-off Points of Team Lease Services IPO|
|The CAGR of the company is over 30% which shows a bright story behind its success and that there is high potential for growth.||The EBIDTA and PAT are very minimal and hence this also indicates that the company might have challenges going forward.|
|Team Lease is a well claimed brand for staffing solutions in India. The others in the race are just budding and there are chances for the company to win over tem. The total market share with Team Lease at present is only 5% but even with a small share like this, it is a name that is well known for its services. It staffing solutions are also its key differentiator.||There are no dividends that are paid off by the company in the last 5 years and moreover, the profits are also seen from the last 2 years. The 3 years prior to which had no profits.|
|The company has grown massively and has 9 offices across India and 1252 employees on its pay rolls.||The key stakeholders of the company are under some criminal proceeding by the law and this can seriously impact the business.|
|Further the company also aspires to take over acquisitions and improve the present environment and IT infrastructure after the IPO.|
Should you invest in Team Lease Services IPO?
In the growing economy of India, there is a large sector for labor. India provides the second largest labor in the world and one can see bright potential for growth in this sector. Team Lease is one of the top- notch brands who are the show stopper of these services. The company is growing drastically but also needs to improve over the margins. The lower price of each share is expected to be Rs.785 which indicates PE ratio of 49X. This is definitely far expensive than the price of its competitors in the market who trade at PE of 33X. Based on the figures stated above, it states that the company is growing rapidly but at the same time the share are very expensive and not too alluring for investors. The company should grow first and then with increasing margins and consistent growth it will be a boon for the investors.