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No Potential Buyback Support for TeamLease as Shares Slide Over 9%

TeamLease reported a 14% year-over-year increase in total revenue.

Shares of leading staffing services company TeamLease Services Ltd plunged 10% on Friday to their lowest level in a year after reporting weak earnings for the December quarter.

TeamLease reported a 14% year-on-year rise in total revenue to Rs 2,018 crore compared to Rs 1,767 crore a year earlier. On a quarter-on-quarter basis, total revenue was up 3% from Rs 1,967 crore in the September quarter.

The company attributed the slower revenue growth to weaker festive demand in the December quarter compared with the September quarter and the preceding period.

Profit after tax (PAT) fell 5% to Rs 29 crore in the December quarter from Rs 30 crore a year ago. It was down 9% quarter-on-quarter compared to Rs 32 crore in the preceding quarter.

The company’s EBITDA fell 16% year-on-year to Rs 32 crore from Rs 38 crore a year earlier, flat compared to the September quarter.

EBITDA margin fell to 1.6% in the December quarter, compared with 2.1% a year earlier.

TeamLease said its margins would be under pressure in the coming quarters given weak demand, fulfilment pressures and the impact of NEEM (National Employability Enhancement Scheme).

Recall that TeamLease had to release almost 20,000 trainees after the government terminated the National Employability Enhancement Scheme on 23 December 2022. It has reached out to 26,000 trainees under the scheme, which the client has agreed to keep until further clarity.

At the same time, the company also notified the stock exchange that a board meeting is scheduled to be held on February 3 to consider the proposal to repurchase shares.

Kotak Securities lowered its target price on TeamLease shares to Rs 2,275 from Rs 2,475 earlier while maintaining its “underweight” rating after sharing the gains. The brokerage lowered its fiscal 2023-2025 earnings per share (EPS) forecast by 6-11%.

Motilal Oswal also maintained his Neutral rating on the stock but lowered the price target to Rs 2,330.

Shares of TeamLease were trading at Rs 2,200 per share, down 9.13%.

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