TeamLease Services surges 11% as hiring intent highest in Q3

The company said hiring intent has touched its zenith mark at 41 per cent in October-December quarter

Shares of TeamLease Services moved higher by 11 per cent to Rs 4,355 on the BSE in Tuesday's intra-day trade after the company said hiring intent has touched its zenith mark during the October-December quarter (Q3FY22) with 41 per cent, a 3 per cent gain over July-September quarter (Q2FY22).

TeamLease Services is one of India's leading human resource (HR) companies offering a range of solutions to 3500+ employers for their hiring, productivity and scale challenges.

The findings from the TeamLease Services platform reflect the positive economic sentiment and consumer confidence, while also corroborating India Inc's pent-up talent acquisition requirements, the company said in a press release.

"Although the corporate workforce demand hasn't touched the pre-pandemic mark, the continuous quarter-on-quarter increase in hiring intent, as mapped by TeamLease Services, points to significant business realignment to adjust to digital transformation needs. The workforce number is expected to expand by 430 million approximately by Dec 2021," it added.

The blue-collar hiring is seeing huge demand to meet increased sales and delivery expectations and warehousing for streamlined supply chain management for eCommerce and retail. Hyderabad, Pune, and Chandigarh are top non-metro cities to hire in Q3. Tier-2 cities show 41 per cent intent to hire followed by Tier-3 cities at 26 per cent, the company said.

"Overturning the past quarters' economic downturn and reverse migration of labour force, companies are bullish on hiring this quarter, which is a positive trend for the industry. India is growing at an 8 per cent GDP rate owing to the rapid inoculation rate. Not to mention, precedents like fewer supply chain disruptions and festive season-led eCommerce sector growth are crucial reasons behind corporate recruitment appetite," said Ajoy Thomas, VP & Business Head, Retail, E-Commerce, Logistics & Transportation (RELT) vertical at TeamLease.

Meanwhile, despite today's over 10 per cent surge, the stock is down 21 per cent from its record high level of Rs 5,544 touched on October 11, 2021.

Analysts at HDFC Securities maintain BUY rating on TeamLease, following a better-than-expected revenue (+10.7 per cent QoQ) and in-line margin performance for Q2FY22. "Strong developments in hiring activity across key verticals (ecommerce, telecom, consumer, and BFSI), the addition of 59 new logos, and improved hiring outlook across industries will aid growth in the core staffing segment (90 per cent of revenue), "the brokerage firm said.

"We expect margins for general staffing to remain in a narrow band on account of the growth and increasing wage costs. Margin expansion will be led by specialised staffing and positive contribution from HR services. The company made provision of Rs 75 crore related to PF trust investments in two NBFCs. We believe that the company was late in providing for these provisions as this is an old issue; however, we don’t expect further provisions," analysts said with a target price of Rs 5,270 per share.