TEAMLEASE - TeamLease Services Limited Share Price

In the Q1 FY '26 earnings call, TeamLease management reported a successful quarter with an addition of 5,000 billable headcounts, resulting in a year-on-year headcount growth of approximately 19,000, despite prevailing headwinds in BFSI and IT sectors. EBITDA grew 39% year-on-year, showcasing operational efficiency and financial discipline.

Looking ahead, management expressed optimism about recovery across multiple sectors, particularly in NBFCs within the BFSI segment, which are showing signs of increased hiring. The general staffing business is anticipated to have robust growth, with approximately 20,000 open positions, reflecting a potential to reach a steady state volume growth of around 15%. Current headcount additions are around 3,000+, equating to a 5% year-on-year growth.

Key forward-looking statements include the expectation for EBITDA growth of at least 30% year-on-year for the remainder of the fiscal year and a consistent revenue growth target of 25%-30% for HR services. Specific focus areas include optimization through technology investments and increasing productivity.

For specialized staffing, net headcount increased by 115 resources, with management highlighting a steady contribution from the GCC segment, which accounts for 46% of headcount and 64% of net revenue. The management anticipates maintaining an 8%-10% global contribution to total revenue.

In summary, TeamLease management portrayed a positive outlook centered around recovering demand in core sectors, strategic client acquisitions, and leveraging technology for operational improvements, indicating a strong conviction for the upcoming quarters.

Question 1: 'Could you share some light on how is the margin profile or the business profile different in India versus overseas? And what kind of traction are you seeing in India and overseas?'

Neeti Sharma: "The global numbers currently are quite small, making direct comparisons difficult. However, we aim to enhance our execution and margins by leveraging our India delivery capabilities for global requirements. While margins for Indian clients are currently better, we anticipate expanding our client base and onboarding in Singapore and the Middle East, which may lead to improved margin expansion."

Question 2: 'Ramani, if I heard you correctly, you said that the acquisitions contribute to 4% of overall EBITDA?'

Ramani Dathi: "Yes, that's correct. Our acquisitions are contributing significantly to our overall EBITDA, aiding in our growth strategy while maintaining a strong operational performance."

Question 3: 'Would it be fair to say that the growth we have seen in EdTech is more a function of the NEP, which was delayed last year?'

Ramani Dathi: "Not exactly. While the NEP has had an impact, the full-year revenue for EdTech has shown a 40% growth year-on-year. Therefore, I'd suggest this growth isn't merely an aberration but represents underlying demand and business strength."

Question 4: 'What kind of growth projections would you have for both HR and RegTech, and at what scale should they comfortably breakeven?'

Ramani Dathi: "The HR services segment should maintain a revenue growth of 25%-30% consistently with an EBITDA margin between 6%-8%. RegTech is already breakeven, while HR Tech is expected to become EBITDA positive by mid-next year."

Question 5: 'You mentioned that most of the headwinds have been behind. How is the pipeline for Q2 looking?'

Karthik Narayan: "The pipeline for Q2 is looking positive, especially in sectors like BFSI and consumer business, which had seen slowdown. While the 20,000 open positions are lower than last year's 30,000, we're optimistic about growth stemming from wallet share expansions in existing accounts."

Question 6: 'Amit mentioned that you earlier guided for 15% steady-state growth in general staffing; when do you expect this to be achieved?'

Karthik Narayan: "The outlook for Q2 is positive, and if the growth momentum maintains itself, we should begin to approach that 15% growth by Q3. We are actively seeing recovery signs in BFSI, which would support this growth."

Question 7: 'Can you provide the PAPM number for this quarter and any margin tailwinds expected?'

Ramani Dathi: "The PAPM has remained flat quarter-on-quarter. We are focusing on adding value-added services to improve margins. With all fixed costs absorbed, volume growth will equate to higher operational leverage, which should yield better productivity and margins going forward."

Question 8: 'Can you share the revenue split between India and global clients in the specialized staffing segment?'

Ramani Dathi: "For the specialized staffing segment, approximately 8% of our revenue is derived from global clients, with about Rs. 14 crores generated from these markets. We anticipate this ratio to stabilize between 8%-10% over the year due to sustained domestic growth."

Question 9: 'In specialized staffing, we noticed softer margins this quarter; what were the reasons?'

Ramani Dathi: "The margins were impacted by annual employee appraisals and taking up MSP mandates, which lowered gross margins. However, despite the reduction, the overall profits remain accretive due to demand and strategic client engagements."

Question 10: 'What is the expected margin level for specialized staffing moving forward?'

Neeti Sharma: "Historically, we aim for margins upwards of 7%. We are targeting a gradual recovery towards this level, driven by increased high-value mandates and an improved product mix, which should enhance margins in the upcoming quarters."