Teamlease Services - Gladiator Stocks - ICICI Direct

Strategy

Buy Teamlease Services in the range of Rs. 2600.00-2680.00 for target price of Rs. 3148.00 with a stop loss of Rs. 2388.00. Time Frame: Six months

Technical View

IT sector is on the cusp of breaking out of past two month's consolidation that has been seen after March-October's sharp up move. Within midcap IT space Teamlease stays our top pick

The share price underwent healthy consolidation (Rs. 2588-2072) after seeing a sharp up move (82%) in May-August 2020. Currently, the stock has resolved out of ongoing consolidation, indicating resumption of primary up trend. This augurs well for acceleration of upward momentum. Hence, it offers a fresh entry opportunity

Key observation to highlight during up move since June 2020 is that the stock has been finding elevated buying demand at its 10 weeks EMA, indicating inherent strength

Structurally, it formed a higher base after resolving out of downward sloping trend line (drawn adjoining October 2019-February 2020 highs of Rs. 3200-2880). In this phase weekly volume was subdued as it was below its 50 weeks average volume. This has now started picking up, indicating revived buying demand

We expect the stock to maintain its upward momentum and head towards Rs. 3148 in coming months as it is price parity of July-September rally (Rs. 1630-2588) projected from November low of 2176, at Rs. 3134

Fundamental View

TeamLease Services (TLS), established in 2002, is one of India's leading providers of human resource services in the organised segment with ~6% share in the flexi staffing industry. TLS' services span the entire human resources supply chain covering employment, employability and education. Employment services include temporary staffing solutions, IT staffing and regulatory consultancy for labour law compliance while employability offerings include learning and training solutions

TeamLease Services (TLS) with its core expertise in general staffing and focus on India, the company is ready to grab the opportunity in the least penetrated temporary staffing market in India (0.5% in 2015 vs. global average of 1.7%). We believe penetration in the temporary staffing market should rise through favourable industry dynamics like formalisation of economy and GST. Further, considering reopening of the economy, push for local manufacturing, the aim of India to be a global supply chain along with labour reforms will give a huge fillip to TeamLease's business in the long run. We believe that with scalability and expertise in staffing, the company is set to reap the benefits of an under-penetrated flexi staffing industry in India

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_GladiatorStocks_Teamlease_Dec20.pdf

Shares of TeamLease Services Ltd was last trading in BSE at Rs.2769 as compared to the previous close of Rs. 2806.9. The total number of shares traded during the day was 1882 in over 614 trades.

The stock hit an intraday high of Rs. 2896.2 and intraday low of 2714.25. The net turnover during the day was Rs. 5265904.

Source : Equity Bulls

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