TeamLease Services Ltd IPO Message Board (Page 40)

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GMP OF TEAMLEASE ?
WETHER TO SELL IN GREY MARKET OR SIMPLY APPLY & HOLD ?

Teamlease Services28 Jan 2016 at 04:00 pm

By Geetanjali Kedia

Teamlease Services is entering the primary market on Tuesday 2nd February 2016, to raise Rs. 150 crore via a fresh issue of equity shares of Rs. 10 each and an offer for sale of up to 32.2 lakh equity shares, by PE investors and a small portion by promoter, both in the price band of Rs. 785 to Rs. 850 per share. The total fund raising aggregates to Rs. 424 crore, at the upper end of the price band, of which, offer for sale portion is Rs. 274 crore. Representing 29.16% of the post issue paid-up capital at the upper end, the issue will close on Thursday 4th February.

Teamlease Services provides human resource services (employment, employability and education) mainly for sales, logistics and customer service functions to the Indian organized sector, having close to 1.05 lakh associate employees as of 30-11-15. For FY15, company’s consolidated revenue stood at Rs. 2,007 crore and margins being wafer-thin on account of employee costs accounting for ~97% of topline, EBITDA stood at Rs. 35 crore for FY15, resulting in EBITDA margin of just 1.77%. Due to negligible depreciation and finance costs, net profit came in at Rs. 30 crore and net margin at Rs.1.48%, leading to an effective EPS of Rs. 19.36 for FY15, after adjusting for bonus issue of 29 shares for 1 share held, on 9-7-15 and consolidation of face value from Re. 1 to Rs. 10 on 10-7-15. Why did company, with FV of Re.1, think of consolidating it to Rs. 10, ahead of the IPO?

For H1FY16, consolidated revenue and EBITDA stood at Rs. 1,210 crore and Rs. 17 crore respectively, up 28% and 14% YoY respectively. However, increase in employee benefit expenses to 97.5% of sales from 96.9% of sales, shrunk EBITDA margin to just 1.44% for the first half of FY16, from FY15’s 1.77%. Effect on net profit was sharper, declining to Rs. 11 crore in first half of FY16 (net margin of mere 0.91%), from Rs. 17 crore reported for H1FY15 (net margin 1.82%), signifying the very high delta on account of a single line item, making it a very risky proposition. EPS for H1FY16 stands at Rs. 7.16.

As of 30th September 2015, company’s net worth is at Rs. 160 crore, comprising equity share capital of Rs. 15.33 crore (post 29:1 bonus and consolidation of FV from Re. 1 to Rs. 10 per share) and reserves and surplus of Rs. 144 crore - Rs. 100 crore Securities Premium (on account of PE investment in 2009 and 2011) and Rs. 44 crore Profit and Loss credit balance. Although company has operational history of over 10 years (established in 2002), it became profitable only in FY14 (took over a decade to breakeven). Hence, balance in P&L is quite low.

Being absolutely debt-free, it has cash and equivalents of Rs. 122 crore, as of date, which is mainly from the past PE deals, as cash profit of only Rs. 57 crore has been earned in 30 months between FY14 to H1FY16. Promoter holding currently stands at 51.86%, while 2 PE investors (Gaja Capital and India Advantage Fund), who are part-selling, hold 41.67%. Balance stake is held by key managerial personnel and employee trust. Post IPO, promoter holding will decline to 45.61%, while the 2 PE investors will hold a combined 19.43% stake (assuming book discovery at upper end).

Fresh issue of Rs. 150 crore looks structured, only to comply with Sebi’s IPO requirements, since the company is flush with surplus cash of Rs. 122 crore, as of 30-9-15. One of the object of the issue is acquisition and other strategic initiative worth Rs. 25 crore, to be incurred in FY16 itself. With barely 2 months for the fiscal to close and target yet to be identified, unlikely that this amount will be utilized as stated in the RHP. Also, of the Rs. 80 crore to be utilized from IPO proceeds towards working capital, only Rs. 32 crore is to be deployed in FY17 while Rs. 48 crore is needed for FY18, which can very well be taken care of, through bank funding and internal accruals, at a later stage. Last object of upgrading IT infra worth Rs. 15 crore is also a mere eyewash. Thus, the IPO is undertaken only to provide part exit to PE investors, having invested in the company since 5-7 years (2009 and 2011).

At upper end of price band of Rs. 850, company is seeking a market cap of Rs. 1,453 crore, on enterprise value (EV) of Rs. 1,332 crore. This leads to EV/EBITDA multiple of 37x and 28x for FY16 and FY17 respectively, which is quite aggressive, given company’s EBITDA margin in very low single digits, coupled with fragmented and highly competitive nature of industry, with almost nil entry barriers. Even on a PE multiple based valuation, 59x and 43x for FY16 and FY17 respectively are unconvincing and very stretched.

Since 75% of issue is reserved for QIBs, as company does not have 3 year history of positive bottomline, the issue, with its ‘hype surrounding unique play and first sector listing’ may create buzz among institutional investors. However, fundamentally, it is not suited for retail investors, due to wafer-thin margins and expensive valuations.

Hence, we advise an avoid on the issue.



Disclosure: No interest.

Septa Sir,

How reliable is her recommendation?

Recommendation for current issues:
Teamlease – We advise an avoid on the issue.
Precision – Clear Avoid. No interest.

Past Track record:
Narayana Hrudayalay – On fundamental grounds, the Issue can be given a miss
Dr. Lal Pathlab – While the pricing is not the cheapest, one can apply in the issue.
Alkem – Subscribe
SH Kelkar – Subscription to the issue is not warranted
Indigo – Not applying in the issue

So, how much credibility do you think we should give to her opinion?

she even gave do not apply for VRL so go figure the best IPO of 2015

Is this good or bad for Teamlease ?

http://www.moneycontrol.com/news/ipo-news/quess-corp-files-ipo-paperssebi_5188741.html

http://www.business-standard.com/article/pti-stories/quess-corp-files-ipo-papers-with-sebi-116012800392_1.html

http://profit.ndtv.com/news/corporates/article-quess-corp-files-ipo-papers-with-sebi-1271022

http://economictimes.indiatimes.com/markets/ipos/fpos/quess-corp-to-file-ipo-papers-with-sebi/articleshow/50757087.cms

Coz it has only 10% for RII ... it needs only 33K retail applications to fill RII quota by 1X .... so the ratio of the lottery will be much much lower ... therefore the kostak is so low ....

(as a comparable ... PCL needs 100K applications for 1X of RII portion.)

Everybody is enamoured by TSL high GMP ..... but if you do the detailed maths ... you shall realise that ... PCL will give the investors a significantly better ROI to us than TSL.

okay

PCL GMP 06-07 per share (activity in full swing)

TSL GMP 245-250 per share (low activity)

how to GET INFO FOR GMP

Visit Chittorgarh regularly ...

Both ipo is rocket ipo.

Which IPO is better Team lease or PLC....................?

Sir Teamlease ipo is better than PCL

TCL GMPs 245-255 ●

Precision Camshafts Ltd IPO or TeamLease Services Ltd which is good for new investor ????????????

teamlease ipo is good for invest ?

teamlease ipo too expensive it will be flop like pcl ?

pcl ipo is better then teamlease ipo

Teamlease issued shares to Gaja Capital in 330 approx in 2011 now asking 850 that means 3x return to Gaja simultaneously company also grew 3 times from there.
GMPs 245-250

Issue Detail:

»» Issue Open: Feb 2, 2016 - Feb 4, 2016
»» Issue Type: 100% Book Built Issue IPO
»» Issue Size: 3,219,723 Equity Shares of Rs. 10
»» Issue Size: Rs. 252.75 - 273.68 Crore
»» Face Value: Rs. 10 Per Equity Share
»» Issue Price: Rs. 785 - Rs. 850 Per Equity Share
»» Market Lot: 15 Shares
»» Minimum Order Quantity: 15 Shares
»» Listing At: BSE, NSE

Eagleye teamless ka kostak price kya h. .
Today. .

Eagleye teamless ka kostak price kya h. .
Today. .

650 kostak

220-225 Now Low Volume
No form buying.

Teamlease Services Limited

PAT for 6 months ended Sept''15 = 11Crs (inclusive of other income)

At issue price of 850 their post issue market cap will be 1453Crs ...

Further if we consider the price of 1100 (850+250) then the market cap would be 1880Crs ...

I just cannot digest the valuation ... Seems Absolutely crazy !!!

Can someone please advise ???

valuation is here based on future earning it capacity to earn huge profit with hardly any assets the lead managers believe that team lease can give at least 30% plus return for next decade or so bcoz HR and temp employment is at infant stage world wide temp is magic word.... both in skilled and unskilled.... If yo take this argument and work out future growth u apply if you think this to much u avoid.... being first in market FII and DII will like this stock.... i worked out if they continue to grow at 30% to 20% even then it is not a good investment but market like such companies and will give very very high premium

here is my working

Initial Cash Flow:      $20,00,00,000                   
                        
Years:      1-5      6-10            
Growth Rate:      30%      25%            
                        
Terminal Growth Rate:      6%            Discount Rate:      10%
                        
Shares Outstanding:      1,70,00,000             Margin of Safety:      30%
Debt Level:      $0                   
                        
Year      Flows      Growth      Value      
1      26,00,00,000       30%      $23,63,63,636       
2      33,80,00,000       30%      $27,93,38,843       
3      43,94,00,000       30%      $33,01,27,724       
4      54,92,50,000       25%      $37,51,45,140       
5      68,65,62,500       25%      $42,63,01,296       
6      85,82,03,125       25%      $48,44,33,291       
7      1,02,98,43,750       20%      $52,84,72,681       
8      1,23,58,12,500       20%      $57,65,15,652       
9      1,42,11,84,375       15%      $60,27,20,909       
10      1,63,43,62,031       15%      $63,01,17,314       
                        
                        
Terminal Year      $1,73,24,23,753                   
                        
PV of Year 1-10 Cash Flows:                  $4,46,95,36,485       
                        
Terminal Value:                  $16,69,81,08,812       
                        
Total PV of Cash Flows:                  $21,16,76,45,296       
                        
Number of Shares:                  1,70,00,000       
                        
Intrinsic Value (IV):                  $1,245.16       
                        
Margin of Safety IV:                  $871.61       
                        
What Percentage of IV comes from                   79%      
the Terminal Value:                        

Dr eagle mam and septa sir, i want to know ur view...which of the two IPOs have more chance for a listing day gain..?

Teamlease Services Limited

Bid/Offer opens on 02nd Feb
Bid/Offer closes on 04th Feb

Basis of Allotment on 09th Feb
Unblocking of ASBA on 10th Feb

Commencement of trading on 12th Feb

One should apply for short term listings gain only....