15 Nov , 2021 By : Kanchan Joshi
NEW DELHI : Temporary staffing company TeamLease Services Ltd reported mixed set of earnings in the September quarter. Its operating performance was decent with revenue growth of about 11% on a sequential basis aided by a broad-based growth across all the three verticals.
Recovery in demand due to seasonality factor helped the company add 25,000 associates in Q2, which is a record high. In a post-earnings conference call, the management said that associate addition in General Staffing stood at 14,000, specialized staffing had a net associate addition of 900 and NETAPP added 10,000 trainees in Q2FY22, a record high.
However, the company reported an adjusted loss of Rs49 crore on account of loss provisions in its PF trust on DHFL investment resolution.
"This provision was surprising as TeamLease had earlier maintained that reserves and future gains will compensate for any shortfall. While we view this as a one-time hit, this is likely to impact investor confidence," analysts at Motilal Oswal Financial Services Ltd said in a report.
"TeamLease's PF fund is also struggling to generate returns to provide an EPFO mandated 8.5% return, the provision of Rs75 crore also takes care of Rs10 crore- Rs15 crore of annual losses for the next five years. However, there is a risk that for any additional investment losses in PF trust may have to be funded via the company's core operations," analysts at Prabhudas Lilladher Ltd said in a report.
Consequently, shares of the company slipped 6% on the NSE in Monday's opening trade.
Going ahead, while the company's management remains upbeat on the demand scenario, it expects increased headline billing, wage hikes, and a rising insurance bill to weigh on margin in the short-term. So, margins are likely to remain flattish for next two-three quarters, the management said. In the backdrop, analysts say, the stock's valuations are expensive and need to correct.
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