Teamlease margins impacted by wage hike of core employeesTEAMLEASE - 2576 Change: 51.75 (2.05 %)
News: Teamlease reported sequential drop of 90bps in margins to 1.3% due to i) wage hike for core employees ( around 12-13% this year vs 7-8% run rate) ii) seasonality in Ed Tech business which is a part of Other HR services and also higher salary inflation of associates. Revenue was up 3.4% to Rs1879.4 crore aided by 4% QoQ increase in general staffing ( 91% of revenue mix) while specialised staffing and other HR services reported decline in revenues sequentially. Specialised staffing revenues were impacted by delay in decision making by some clients while that of other HR services was hit by seasonality in Ed tech business. In terms of Margins business wise, General staffing declined by 20bps to 1.6%, specialised staffing by 10bps to 8.8%. Margins in other HR services declined QoQ but improved on YoY basis.
Views: The company’s margin performance was impacted partly by seasonality and partly by costs increase. The company is now guiding flat margins in FY23 vs their earlier commentary of improvement in margins reflects further cost pressures. The company also indicated that there has been delay in hiring decisions in some of the sectors like start-ups also impacting its growth. Average mark-up has been flat QoQ around Rs700 also disappointing.