Motilal Oswal Reiterates BUY Rating on TeamLease with INR 2,000 Price Target

Motilal Oswal's latest research report on TeamLease Services indicates that the company's revenue growth in the second quarter of Fiscal Year 2026 (2QFY26) stood at 8.4% year-over-year (YoY), falling short of the brokerage's estimate of 13% YoY growth. General Staffing (GS) saw a 4% quarter-over-quarter (QoQ) increase, while Specialized Staffing grew by 8% QoQ. The EBITDA margin was reported at 1.3%, closely matching the expected 1.4%. Notably, EBITDA saw a significant improvement of 25% QoQ. The Adjusted Profit After Tax (Adj. PAT) was INR 278 million, marking a 12% YoY and 11% QoQ increase.

For the first half of FY26 (1HFY26), TeamLease reported revenue and EBITDA growth of 10.2% and 23.7% YoY, respectively. Looking ahead to the second half of FY26 (2HFY26), Motilal Oswal projects revenue and EBITDA growth of 12.4% and 14.4% YoY.

Impact: This report reiterates a positive outlook, maintaining a BUY rating and a price target (TP) of INR 2,000, based on 18 times the estimated Earnings Per Share (EPS) for June 2027. The positive sentiment is driven by the medium- to long-term opportunities stemming from the formalization of the labor market in India. The brokerage expects to keep its financial estimates largely unchanged.

Impact Rating: 7/10

Difficult Terms: YoY: Year-over-Year, comparing a period with the same period in the previous year. QoQ: Quarter-over-Quarter, comparing a quarter's results with the preceding quarter's results. EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. A measure of a company's operating performance. Adj. PAT: Adjusted Profit After Tax. Profit after tax that has been adjusted for specific items to better reflect the company's core earnings. EPS: Earnings Per Share. A company's profit divided by the number of outstanding shares of its common stock. TP: Target Price. The price at which an analyst or broker expects a stock to trade in the future. Formalization of the labor market: The process where informal employment sectors become regulated, registered, and taxed, leading to better worker rights and company compliance.