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  • 19 May 2022
  • ICICIdirect Research

TEAMLEASE REPORTED BETTER NUMBERS ON MARGINS

TEAMLEASE - 2863 Change: -34.80 (-1.20 %)

News: The company reported EBITDA growth of 8.9% QoQ to Rs. 41 crore while EBITDA margins at the company level improved 20 bps QoQ to 2.3%. EBITDA margins for general staffing/ specialized staffing/other HR services improved by 10 bps, 50 bps, 560 bps QoQ, respectively. For FY22, it reported EBITDA growth of 20%, 21% in general staffing/specialized staffing, respectively, while other HR services reported EBITDA break-even vs losses in FY21. EBITDA margins for FY22 improved 20bps to 2.2%. Revenue is up 33% in FY22 at Rs.5838 crore. Productivity ratio has declined 10.6% QoQ to 346

Views: The EBITDA performance has been impressive vs last year because of turnaround of other HR services. Going into FY23, the company expects continued robust hiring from IT, Telecom, Pharma, Retail, E-commerce as well as from manufacturing space which is expected drive revenues while continued improvement in Other HR services and specialized staffing will drive the margins. Productivity ratio drop was due to front loaded hiring to cater massive associates addition of 50K in FY22 and also due to potential churn in core employees in Q1FY23. Productivity is expected to improve, going forward.  The company indicated that ongoing legal course with income tax department on section 80AAJJ will take long time for the judgment to come. in case of unfavourable judgment, the potential liability would be in the tune of Rs. 150 crore, which can be set off from TDS refund available with Income tax.  The company is however confident of favorable judgment in this case and hence indicated that they will continue to take that benefit

Impact: Negative