Teamlease Sees BFSI Segment Pressures Easing In March Quarter

TeamLease Services' Chief Financial Officer Ramani Dathi expects the pressures in the banking, financial services, and insurance, or BFSI segment to recover in the fourth quarter of the current financial year.

The company is one of the biggest staffing and human resources service providers in India. It caters to a wide range of industries including retail, manufacturing, IT, and BFSI.

Earlier, TeamLease Services Ltd. had indicated that it would face some pressures from the BFSI segment in Q3, following new regulations from the Reserve Bank of India.

Despite the pressures in the BFSI segment, Dathi told NDTV Profit that the company will increase hiring. “Even with the BFSI drop, we believe that there should be at least 8,000–10,000 net headcount growth in Q3 as well," she said, adding, "And by Q4, we expect recovery to bounce back, including BFSI, across all other sectors. We should be able to continue with a year-on-year growth of 18% to 20% headcount growth.”

The CFO explained that the BFSI division at TeamLease Services is split into IT and non-IT segments, with the latter currently facing pressures. “We are seeing very good growth within IT, mainly coming from the GCC segment. And we believe this hiring trend will continue even for Q3 and Q4. We are expecting positive headcount recovery, starting Q4.”

TeamLease, in the quarter ended September, witnessed an 8.4% quarter-on-quarter rise in revenue to Rs 2,797 crore, up from Rs 2,580 crore in the quarter ended June.

Ebit margin stood at 1% versus 0.3% in the preceding three months. Net profit grew 28% sequentially from Rs 19 crore in Q1, to Rs 25 crore in the quarter under review.

Dathi said that the Bengaluru-headquartered company is aiming for a 20–25% revenue growth in the next 3–5 year time frame. However, currently, the focus is on expanding margins and profits on a QoQ basis. “We have a higher focus on margin expansion and absolute profit expansion, because we hit our rock bottom in Q1 of this year with all the impacts coming from IT staffing or apprenticeship business and other impacts. And now, we are focusing on expanding our profits quarter-on-quarter.”

According to the TeamLease CFO, “This year, we posted about 30% sequential growth, and we believe we should be able to maintain at least a 20% sequential growth in profits for the next quarters as well.”

The top executive also revealed pockets from where growth will come to the company. “For the next 3–5 years, there will be a higher contribution coming from IT staffing and HR services, which have relatively a higher margin profile compared to general staffing, leading to the overall margin expansion at group level,” she said.

Shares of TeamLease Services Ltd. were trading 0.43% lower at Rs 2,726.45 apiece as of 10:00 a.m., while the benchmark index Nifty 50 was 0.14% lower at 24,165.60.