TeamLease slips 11%; hits lowest level in CY 2024 post Q2 results

TeamLease Services share price slipped 11 per cent to Rs 2,541.45 on the BSE in Thursday's intraday trade amid heavy volumes on expectation of muted December quarter (Q3FY25) earnings. The stock price of the people supply chain company hit its lowest level in calendar year 2024.

 

TeamLease share price is trading close to its 52-week low level of Rs 2,424 which it touched on December 13, 2023. The stock has corrected 31 per cent from its 52-week high price of Rs 3,692.45 hit on May 22, 2024.

 

At 11:31 AM, the stock price TeamLease erased partial losses and was trading 4 per cent lower at Rs 2,722.65 on the BSE. In comparison, the BSE Sensex was down 1 per cent at 79,521. The average trading volume on the counter jumped multiple times with a combined 500,000 shares changing hands on the NSE and the BSE.

 

 

Staffing company TeamLease Services, on Wednesday, reported a 10.12 per cent year-on-year (Y-o-Y) decline in consolidated net profit to Rs 24.85 crore for the second quarter ended September 2024 (Q2 FY25). It had posted a net profit of Rs 27.65 crore during the corresponding period of the previous financial year.

 

The company's revenue from operations rose 23 per cent to Rs 2,796.83 crore in Q2 FY25 compared to Rs 2,272.60 crore in Q2 FY24. On a sequential basis, while net profit jumped 28 per cent, total revenue grew 8 per cent.

 

The consolidated earnings before interest, tax, depreciation, and amortisation (Ebitda) came at Rs 33 crore, up 50.3 per cent quarter-on-quarter (Q-o-Q) and 5 per cent year-on-year (Y-o-Y), translating to an Ebitda margin of 1.2 per cent, (up 20 bps Q-o-Q and down 20 bps Y-o-Y). The recovery in the Ebitda from the previous quarter levels came on the back of operating leverage in the staffing business and growth in the EdTech billing.

 

TeamLease saw an uptick across its business segments for the quarter, barring the specialised staffing business, as it continues to face headwinds from the IT industry for the third consecutive quarter. Global capability centres (GCC) clients account for 61 per cent of the segment's revenue, up from 40 per cent 18 months back.

 

The management expects steady growth in the IT industry from Q3 FY25 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 per cent 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, ICICI Securities said in a note.

 

The staffing industry comprises several organised players in the domestic market. There are also several unorganised players that have regional presence and offer services at lower cost, resulting in intense competition. This results in pricing pressure for organised players, who have to incur large overheads to maintain quality of services and staff.

 

As the business involves engagement of manpower, most players in this industry face high attrition, driven by intense competition among players to poach trained manpower. Issues relating to workforce availability can adversely impact relationships with clients and, therefore, revenue flow. However, this is mitigated by the company's strong market position, according to CRISIL.