TeamLease Services Ltd IPO Message Board (Page 41)

No

if that the case if it sure short why beware apply and sell just confused anyway i am not applying how tempting bcoz i will not buy it on secondary market at 850 forget 1100

Beware is to make wise decision so that my post should not lure investors to apply.
Meanwhile its confirmed that big players will play with this stock.

Has it ever happened that despite good GMP the stock tanked after listing? I am a newbee....

was it Power Mech Projects Limited ?

many times monto carlo and Power mech r to recent ones

Dont forget to add UFO IPO

We have three analyst on this board.
1. IPOANALYSIS
2. CHEMCHO
3. staripo

What good about these three is that they have full insight of secondary market they know very much about technicals and bottom levels.

In primary market they will always advice you to skip or avoid IPO no matter what company is or was.

But we never analyzed anything, any issues.....

Also i advised retailers to apply blindly in NH ipo where maximum was avoiding it including master m gupta......

if you do understand stay away one very wiseman once said to me and i am saying the same to you..... one thing is clear premium is very high and GMP is also very high not much floating stock. As arjun said this will create an artificial demand and let at such high premium if some one is buying at 235 he is expecting to make at least 235 given the premium play we have seen lately with other issue so the punter is expecting it to list at 1335/- just based on NL dr lal and alkem GMP and listing price....

I am not going to apply and avoid as my game play is different....

Dont compare such with global peers
As in India company like Indigo trade at 1300 at 50k Cr. Capitalization

Indigo was operators play and now company dragged to 870 value even knowing that Crude at 10 years low.

Teamlease is valued high.

Its valued at 8x to Mv/Ev which is not that high.
Now valuation of Service sector company generally done by DCF Technique

Where cash flows are discounted at Present value system

Which find DCF on Google you will understand the process.
I will repeat that Teamlease is valued ar 1440 Cr. At cash flow of 30Cr. Discounted @15%
As per me slightly on a higher side.

But remember they were coming with 500 cr. Ipo which now is reduced to 423Cr. Just becaof sentiment.
If ita operators driven you cant imagine valuation but post listing should cool down around 675-725.
But till its in operators hand they can drag this till 1250 in no time.
Remember operotors can play both side

Advice: Apply only if QIBs subscription above 12x

It should not be compared with PE mutiple approach.

Take DCF method.
Even Mv/Revenue is around 3x

well said and put forward ur argument.... i am not against DCF valuation many biocon companies had very steep valuation based on DCF in USA but when projected cash flow did not happen it crashed... same was with tech boom... short term or listing gain is possible but will u buy this fundamental my answer is no..... QIB subscription is important and 12x is good guide line for those looking for listing gain.

total income or cash flow is high bcoz billing is done team lease end same thing the out flow is big bcoz they have to pay all the temp employees.. .so i will not going to take mv/revenue in real terms.....the real income is the difference in what the pay and what the get

Dr members, Is it right to value QIB subscription over all other paramters while investing in IPOs....??

I''m not a senior member, but still I am daring a response...

My DCF Valuation:
Assumptions:
(1) They grew 30% in FY15, 20% in FY16 (on annualised basis). Post issue in FY17 and FY 18, I have taken 25% sales growth. I''ve removed non-op income from topline as discussed earlier. For next 2 yrs, sales growth 20%. For next 2 yrs, sales growth 15%. For next 2 yrs, sales growth 10%. Then 5% long term growth in perpetuity ( India''s LT GDP/ Inflation rate).
(2) EBITDA margin: 10 bps increase in first 2 yrs as they are expected to enter into higher value added segments. For remaining yrs only 5 bps improvement.
(3)CapEx and WC changes are not an issue for this business. Hence regular projections in line with historical trends.
(4) Since I have removed Non-Operating income from sales which includes a ''recurring'' item of 74 Million (FD intetest), I have added 70 M cash inflow for all the yrs. Rest of the items in Non-Operating income are ''non- recurring'' and hence not projected for.
(5) Cost of debt: 2% since all their loans are demand loans against FDs with interest 2% over the underlying FD intetest rate.
(6) Cost of capital or IRR: This is chosen by the investors. For ex: If I choose high IRR then WACC (discount rate) for the projected cash flows will be high and Valuation will be low.

With these assumptions, I get 10.7% IRR for share price of 818 ( Mid point of offer range) which implies 3% premium over Risk Free Rate of 7.7% for all the risks ur taking with this company.

This means that if the company is on track with the sales and margin projections, you will keep getting 10.7% return on ur investment. Now if u think u need at least 12% return for such risks then this issue is overpriced as per your Valuation.

If ur bullish on the company and the think that it will grow at much higher rate say 30% instead of 15%-25% that I have assumed then ur Valuation would be higher than mine & ur IRR will be higher than mine say 12% instead of 10.7%.

QIBs do exactly this & take a call whether company''s growth prospects are providing them the IRR they r looking for...

As you would have understood by now that everybody has his own assumptions about sales, margin etc and thus has different valuations & implied IRR. The question is who gets it right? Who is fairest of them all? 10.7% return provided company achieves as much as I am projecting may be good enough for a retail investor but a MF manager may lose his job at such returns.

So, pick ur poison (assumptions)! I have chosen to be guided by my own stupidity.

Gravitas great job but all DCF have a very important factor margin of safety going rate is 30% just based on ur assumption 818 at 30% issue price should be 573 on higher side so merchant banker have assumed bigger growth factors to get to this 850 rupee per share after 30% margin of safety

BTW what the initial cashflow . i took present NOPA and the number i got was Rs 952.97 and 30% safety Rs 667.08 so IMO 670 or below should be offer price

again great job Gravitas