Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TeamLease Services Ltd (BOM:539658, Financial) reported a 6% quarter-on-quarter and 19% year-on-year revenue growth.
- The company added approximately 12,700 headcount during the quarter, including 6,000 new trainees.
- General staffing saw a net addition of over 15,450 associates, marking the highest number reported in the last 10 quarters.
- The company signed 43 new logos, primarily in the Consumer Financial Services and Manufacturing segments.
- Digital transformation efforts have significantly improved operational efficiency, supporting an expanded customer base with the current workforce.
Negative Points
- EBITDA declined due to seasonality, delayed university billing in the EdTech business, and annual appraisals of core employees.
- Specialized staffing demand from IT services companies has not increased remarkably, impacting revenue growth.
- The EdTech business faced a significant impact on Q1 profitability due to delayed billing cycles.
- Despite volume growth, absolute EBITDA has remained flat over the last four years.
- The company experienced a 5% sequential headcount drop in specialized staffing due to exiting low-margin mandates.
Q & A Highlights
Q: Over the last four years, while we've grown spectacularly on the top line front in General Staffing, our absolute EBITDA has remained flat. How will we get out of this rut?
A: Our profit has been largely flattish due to several factors, including a 20 crore impact on overall profits and headwinds in specialized staffing. However, we are confident that from Q2 onwards, we should see consistent improvement in profits and margins.
Q: Can you elaborate on the impact of government schemes announced in the budget on your business?
A: The government’s focus on employment and employability, coupled with formalization, will positively impact our DA and staffing businesses. We await specific details to understand the immediate impact, but directionally, these initiatives will drive growth.
Q: How do you see the scaling of the Degree Apprenticeship (DA) business in the next two to three years?
A: The government’s push for apprenticeships and skilling programs is a positive outcome. We believe that the focus on learning on the job will drive the adoption of degree apprenticeships, leading to substantial growth in headcount and profitability.
Q: What structural changes are necessary to scale up margins in the general staffing business?
A: Margin improvement will be driven by portfolio play and cost optimization. Specialized staffing and DA businesses have faced headwinds but are expected to contribute positively from Q3 onwards. Additionally, focusing on high-margin accounts and variable markup models will help improve margins.
Q: Given the demand in the offshore semiconductor industry and labor shortages in construction and manufacturing, how is TeamLease positioned to capitalize on these opportunities?
A: We are seeing increased mandates from GCCs and the semiconductor sector. Our exposure to manufacturing and industrial sectors is around 12-15%, and we are working to cater to this demand. While labor shortages exist, our ability to match skill and salary levels to job expectations gives us an advantage.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
