loader2
ICICI 3-in-1 Account Login
Open ICICI 3-in-1 Account

Open DEMAT AND TRADING ACCOUNT WITH ICICIDIRECT

  • 18 May 2023
  • ICICI Securities

TEAMLEASE REALISATION CONTINUES TO BE UNDER PRESSURE

TEAMLEASE - 1993 Change: 61.80 (3.20 %)

News: Teamlease revenues growth during the quarter was muted with the company reporting a growth of 0.9% QoQ to Rs 2,027.3 crore (vs our estimate of Rs 2,046.5 crore) due to lower growth of general staffing business which grew 0.8% to Rs1,854 crore (our expectation of Rs1,875 crore). Specialized staffing declined by 0.6% QoQ vs our estimate of 1% while other HR services reported a strong growth of 16.1% QoQ vs our estimate of 10%. EBITDA margin at company level grew by 10 bps QoQ 1.7% (vs our expectation of 15bps decline) due to better cost optimisation, higher than expected HR services margins during the quarter and lower unallocated expenses. The company reported PAT during the quarter was impacted by exceptional items (pertaining to provision towards buyback expenses, impairment of loan given while it was negated to some extent by recovery from PF trust on account of certain investments) and it reported PAT of Rs23.9 crore vs our expectation of Rs28.1 crore. Productivity (core employee to headcount) improved to 350 for the quarter from 342 in Q3 while realisation (PAPM) declined by Rs15 to ~Rs685. For FY23 the company reported revenue growth of 21.5% largely due to 23% revenue growth in General staffing business while specialised staffing and Other HR services grew by 6.6/12.9% respectively. EBITDA margins for FY23 were down 60bps to 1.6%.

Views: The company margin performance was better than expected during the quarter due to strong margin recovery in Other HR services and lower unallocated expenses, however margins for FY23 remained under pressure due to continued pressure on PAPM. Cancellation of NEEM program and slowdown in hiring in e-commerce and new age companies impacted general staffing revenues while moderation of hiring in IT services companies impacted specialised staffing services. Continued pressure on PAPM is worrying and recovery of the same is critical for margin recovery going forward.  

Impact: Negative