TeamLease Shares Jump As Kotak Upgrades Rating To 'Buy'

Shares of TeamLease Services Ltd. rose after Kotak Institutional Equities upgraded the stock to 'buy' from 'reduce' citing recent fall and improving business momentum for the staffing firm.

TeamLease remained well-placed to benefit from a healthy increase in employee headcount as e-commerce sales pick up and core sectors recover, the brokerage said in a Dec. 28 note.

Shares of the company rose 3.46% in intraday trade to Rs 4,010 apiece on Wednesday. The stock has risen more than 5% so far in two sessions.

Kotak Institutional Equities kept its target price unchanged at Rs 4,420, an implied return of 17.31%.

Of the 14 analysts tracking the company, seven maintained 'buy', three recommend 'hold' and four suggest 'sell'. The overall consensus price tracked by Bloomberg suggests an upside of 15.5%.

Kotak Institutional Equities kept its target price unchanged at Rs 4,420, an implied return of 17.31%.

Of the 14 analysts tracking the company, seven maintained 'buy', three recommend 'hold' and four suggest 'sell'. The overall consensus price tracked by Bloomberg suggests an upside of 15.5%.

Here's a summary of Kotak Institutional Equities' view on TeamLease:

Kotak Institutional Equities

• TeamLease's proprietary survey indicates that the intention to hire is showing gradual improvement.

• The current pace of addition can sustain as economic activity gathers momentum (TeamLease added a record 14,060 employees in the second quarter of FY22).

• Expects penetration of organised staffing to improve in manufacturing sector as compliance requirements increase.

• Production linked incentive schemes are likely to lead to incremental generation of 4.5 million jobs over the next five years.

• Demand of staffing services from organised staffing firms like TeamLease likely to intensify in the near-term.

• IT staffing vertical seeing steady demand, especially in segments such as cybersecurity, cloud services, digital and full-stack engineers.

• Remains optimistic on the company's medium-term growth prospects despite Omicron being a major near-term risk.

• Retains earnings per share estimates and fair value of the stock and identifies recent correction in stock prices as an opportunity for investors to enter the company.