India's TeamLease reports 22% fall in Q4 profit on slowing revenue growth

Teamlease Services

17/05/2023 13:05

BENGALURU, May 17 (Reuters) - Indian staffing firm
TeamLease Services Ltd  TLSV.NS  said on Wednesday its
fourth-quarter profit fell more than expected, hurt by slowing
revenue growth and weak demand, including from IT companies.
    The company's consolidated net profit fell 22.4% to 239.4
million rupees ($2.93 million) in the quarter ended March 31,
much steeper than the roughly 9% drop analysts, on average, had
expected, according to Refinitiv IBES.
    Teamlease, which hires and trains people in various skills
before placing them in a raft of companies, had warned its
margins would be under pressure due to soft demand and the
discontinuation of the government's National Employability
Enhancement Scheme (NEEM) in December.
    The company said the scheme's discontinuation lowered its
headcount by 9,000 from September to March, and lowered its
revenue by 50 million rupees in the March quarter.
    The company's specialised staffing services, which includes
IT staffing operations, also took a hit, given the uncertainty
among Indian IT firms as their U.S. and European clients cut
back on spending.
    Revenue in that business fell 4.5% in the latest quarter,
accounting for less than 7% of total revenue for the first time
in four years.
    However, revenue from general staffing, TeamLease's biggest
business, rose 13%, helping pull total revenue from operations
up 11.5% to 20.27 billion rupees.
    This is the second straight quarter in which total revenue
growth came in below 15%, after six straight quarters of 20%-40%
growth.
    However, a 12.3% jump in total expenses outweighed the 11.5%
revenue growth in the latest quarter and weighed on margins.
Core profit margins fell to 1.7% from 2.3% year-on-year.
    "Margins have come under pressure due to external variables
impacting the higher-margin businesses of specialised staffing
and degree apprenticeship," said Managing Director Ashok Reddy.
    TeamLease's shares closed 2.68% higher at 2,316.50 rupees
ahead of the results.
 
 ($1 = 81.7800 Indian rupees)

 (Reporting by Ashish Chandra in Bengaluru; Editing by Janane
Venkatraman)
 ((ashish.chandra@thomsonreuters.com; +91 7982114624;))