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  • 07 Nov 2024
  • ICICI Securities

TEAMLEASE: STRONG REVENUE AND MARGIN PERFORMANCE

News: Teamlease reported steady Q2, aided by the growth in its General Staffing segment. The company reported a revenue of ₹2,796.8 crore, up 8.4% QoQ/ 23.1% YoY. The HR services business (1.6% of the mix) reported a solid quarter with a 110% increase on a QoQ basis, led by EdTech, General Staffing (93.3% of the mix) was up by 8.1% QoQ, while Specialised Staffing (5.1% of the mix) declined by 1.5% QoQ. The consolidated EBITDA came at ₹33.4 crore, up 50.3% QoQ, translating to an EBITDA margin of 1.2%, (up ~20 bps QoQ). The recovery in the EBITDA from the previous quarter levels came in at the back of operating leverage in the staffing business and growth in the EdTech billing. Segment wise General staffing/ specialized staffing/ other HR services reported EBITDA margin of 1.1%/7.9%/1.8% respectively. The company reported PAT (before exceptional items) of ₹24.85 crore, up 28.3% QoQ with PAT margin of 0.9%, up ~10 bps QoQ. The total headcount for the quarter stood at 3,50,240, up 5.6% QoQ/ 16.1% YoY. This increase in the headcount was largely led by the BFSI and Consumer business. 

Views: The company for the quarter saw an uptick across its business segments, barring the specialized staffing business, as it continues to face headwinds from the IT industry for the third consecutive quarter. GCC clients account for 61% of the segment's revenue, up from 40% 18 months back. The management expects steady growth in the IT industry from Q3FY25 onwards. For their HR tech vertical, the company is currently evaluating M&A options to expand their product portfolio and client base leading to improved margins of 8-10% in the coming quarters. Overall, the growth in H1 was achieved on the back of consumer goods, telecom clients and early stage recovery within the BFSI space. The management expects Q3 to be muted as the BFSI sector is expected to face certain headwinds on account of the new RBI regulations.

Impact: Positive