Mehabe score: 4 G Factor: 3 Piotski Score: 8 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 3 and Piotski score of 8.
Description
Team Lease Services provides employment related services. It provides solutions for staffing, recruitment, training, payroll processing and regulatory compliance.
Main Points
Large Opportunity Size
Global staffing industry is projected to grow by 3% YoY to reach $514 billion #. The staffing market in India currently stands at $6 billion and is growing at 15% #. Currently, TeamLease has only 6% market share #.Site:TEAMLEASEMain Symbol:TEAMLEASE
Stock trades at 3954.0, above its 50dma 3735.66. It also trades above its 200dma 3218.65. The stock remains bullish on techicals
The 52 week high is at 4505.65 and the 52week low is at 1953.05
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– is almost debt free.
-‘s median sales growth is 22.30% of last 10 years
Weakness
– Stock is trading at 10.37 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
-Promoter holding is low: 34.01%
-Tax rate seems low
– has a low return on equity of 12.85% for last 3 years.
-Earnings include an other income of Rs.34.76 Cr.
-Promoter holding has decreased over last 3 years: -6.97%
Competition
– The industry trades at a mean P/E of 27.4x. Jubilant Ingrevia trades at the industry’s max P/E of 153.95x. TEAMLEASE trades at a P/E of 75.0x
– Industry’s mean G-Factor is 3.8 while the mean Piotski score is 9.0. TEAMLEASE has a G-Factor of 3 and Piotski scoreof 8.
– Average 1 month return for industry is 8.3%. The max 1- month return was given by C D S L: a return of 30.72 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 1377.0 cr compared to Rs 1136.0 cr for period ended Jun 2020, a rise of 21.2%
Operating Profits reported at Rs 30.0 cr for period ended Jun 2021 vis-vis 24.0 for period ended Jun 2020 .
Operating Margins expanded 6.6 bps for period ended Jun 2021 vis-vis Jun 2020 .
The EPS for Jun 2021 was Rs 15.83 compared to Rs 11.06 for previous quarter ended Mar 2021 and Rs 10.0 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 5122.0 cr for period ended TTM vis-vis sales of Rs 4881.0 cr for the period ended Mar 2021, a growth of 4.7%. The 3 year sales cagr stood at 4.8%.
Net Profit reported at Rs 87.0 cr for period ended TTM vis-vis sales of Rs 78.0 cr for the period ended Mar 2021, rising 10.3%.
Company reported a poor Net Profit CAGR of -3.9% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 303.0 cr for period ended Mar 2021 vis-vis Rs 10.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 13.0% compared to 13.0% over the last 3 Years. – The stock has given a return of 88% on a 1 Year basis vis-vis a return of 17% over the last 3 Years. – The compounded sales growth on a TTM bassis is 1% vis-vis a compounded sales growth of 10% over the last 3 Years. – The compounded profit growth on a TTM basis is 568% vis-vis a compounded profit growth of 3% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 37.0% vis-vis 37.83% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 11.28% vis-vis 11.03% for Mar 2021
Conclusion
– has reduced debt.
– is almost debt free.
-‘s median sales growth is 22.30% of last 10 years – Stock is trading at 10.37 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
-Promoter holding is low: 34.01%
-Tax rate seems low
– has a low return on equity of 12.85% for last 3 years.
-Earnings include an other income of Rs.34.76 Cr.
-Promoter holding has decreased over last 3 years: -6.97%
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 3735.66 and is trading at 3954.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
