- L&T'S Q3 net profit jumps on higher execution
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Find out what's happening in trade so far with Hersh Sayta and Pallavi Nahata on Market IQ. #NDTVProfitLive
- Solid gains for Nifty PSU banks
Find out what's happening in trade so far with Hersh Sayta and Pallavi Nahata on Market IQ. #NDTVProfitLive
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01:17 Good afternoon.
01:26 Welcome.
01:26 You're watching "Earnings Edge" with NDTV Profit.
01:29 I'm Harsha Iyer with Ms. Pallavinatha.
01:31 We're going to take you through, of course,
01:33 the next 15-odd minutes where we'll
01:35 speak to the management of TeamLees,
01:37 and we have them with us today.
01:39 And we also have--
01:42 after which, we will switch over and talk
01:44 about a few specific stocks which
01:46 are making good moves today.
01:47 So first off, let me welcome on board
01:50 Ramani Dutty, who is the CFO at TeamLees Services.
01:53 Welcome to NDTV Profit, Ramani.
01:57 Thank you.
01:58 Right.
01:59 Talk to us about what's caused a good spike when
02:02 it comes to your sequential revenue numbers.
02:05 We're seeing some bit of relief with regard
02:07 to that revenue number coming back sharply.
02:11 Is it just second half, or is there
02:13 something else that's fundamentally changing?
02:17 Yes.
02:18 No, definitely in terms of volume growth,
02:20 compared to last year, this year,
02:23 there has been a good momentum.
02:25 So far, for this nine-month period,
02:27 we have added 35,000 new headcount to our base.
02:31 And specific to Q3, there is some sort of seasonality,
02:34 because typically in Q3, companies also
02:37 pay festive bonuses and one-time billings to their associates.
02:41 So that also creates some 1%, 2% of a temporary hike
02:47 in the revenue billing.
02:48 So that's why, when you look at the sequential growth
02:50 in revenue, it is 8%.
02:52 But if you normalize taking away this festive billing,
02:54 it's a 7% sequential growth, which is still a good number.
02:57 And that is because of the consistent growth
03:00 in headcounts, associate volumes, and ad markups.
03:06 OK.
03:06 So, ma'am, I do want to ask you a little bit about the margins.
03:10 Now, despite fairly strong revenue growth,
03:12 we have seen slightly lower margins.
03:15 And the management has said that it
03:18 is expected to return to its normal band
03:21 once there's, once again, a little bit of a pickup in IT.
03:24 But what do you have to say on margins,
03:27 and what's the way going forward?
03:30 Yeah.
03:31 No, as you have rightly mentioned,
03:32 our margins got impacted, especially
03:34 over the last few quarters, led by the drop in IT numbers,
03:38 because that's one of our highest margin-contributing
03:40 verticals.
03:41 So with IT staffing being on hold in terms of new hiring,
03:45 so that has impacted our margins,
03:47 as well as the second highest margin contributor
03:50 is our degree apprenticeship business.
03:52 So there are also, because of certain regulatory restrictions
03:55 on some of the schemes, we have to let go 40,000 trainees
03:59 under that program.
04:00 That is, again, at a 7% margin within staffing verticals.
04:05 So that also has impacted the margins in staffing,
04:08 as well as overall company.
04:10 But now that even the DA business,
04:12 the apprenticeship business, also
04:13 has turned net positive in terms of additions.
04:16 So that can start contributing meaningfully
04:19 to profits, as well as margins going forward.
04:22 So how we are looking at FY25 is, even without IT picking up,
04:28 with the operating lead rate in staffing business,
04:30 as well as DA business turning positive on headcount growth,
04:34 we are expecting improvement in margins,
04:37 as well as absolute profits sequentially in FY25.
04:41 Understood.
04:41 So would you, therefore, seem to suggest
04:43 that margins will go above that 1% mark,
04:46 or would it be around about 1?
04:49 No, it will go up.
04:49 It will go above 1% within staffing segment.
04:52 And at group level also, there'll
04:54 be a consistent improvement in margins.
04:56 Understood.
04:57 And with regard to revenue as well,
04:59 if I can quickly have your take, what sectors
05:02 have been doing well?
05:03 Because it seems IT is still very, very subdued.
05:05 At least the hiring patterns that we saw from the IT
05:08 companies, when they announced their numbers,
05:10 it looked a very subdued kind of a quarter,
05:12 with second consecutive quarter there.
05:14 So which segments seem to be growing?
05:17 And any concerns or any understanding on when
05:21 IT will actually turn around?
05:24 Yeah.
05:24 You are right.
05:25 IT has been sluggish for the last few quarters,
05:28 and especially Q3.
05:30 Even going by the seasonality within IT hiring,
05:32 Q3 is the lowest, because there are also
05:35 furloughs and lower billing days in Q3.
05:38 That also has impacted this quarter.
05:41 But even otherwise, at this point in time,
05:44 we are not seeing any recovery as far as IT services
05:47 are concerned.
05:48 However, GCCs and captives are giving us good demand,
05:52 and we are seeing green shoots on that side.
05:55 So we are focusing more on adding the IT headcount,
05:59 tech headcount on GCC side for the next few quarters.
06:02 Whenever the demand picks up on IT services front,
06:05 so we are fully prepared to deliver on that.
06:08 Other than IT, for this quarter, BFSI is a little disappointing,
06:13 because while initially we have expected that almost 20%,
06:17 30% of volume growth in this quarter would come from BFSI,
06:21 it is kind of muted in Q3.
06:24 However, Q4, we have a good pipeline,
06:27 and we have to see how the BFSI picks up in Q4.
06:31 Other than these two segments, IT and BFSI,
06:34 we are seeing good demand from rest of the segments,
06:38 be it consumer, retail, manufacturing, telecom, pharma.
06:43 Across all these industry segments,
06:45 we are seeing good demand for Q4 and FY25.
06:48 OK.
06:49 I do have one last quick question.
06:51 You're better placed than most, I guess,
06:53 to give us a quick view of employment broadly.
06:57 So for instance, you did mention some of the sectors
06:59 that are looking up, but what's the outlook going forward?
07:02 And how are you piecing the broad employment
07:05 picture at this point?
07:08 Yeah.
07:09 As far as employment outlook is concerned,
07:11 we are very positive for the next four quarters.
07:15 So we conduct a very broad-based survey
07:18 on the outlook for the next 12-month period.
07:20 And that has been positive across segments,
07:23 barring IT, especially at entry-level jobs.
07:27 So we are seeing good demand coming up.
07:30 And mid and senior segment may continue to be impacted,
07:35 but the entry level is going to be very strong
07:38 across verticals, as I called out, consumer, FMCG, FMCD,
07:43 telecom, electronic vehicles, manufacturing, engineering,
07:47 pharma.
07:48 All of these verticals are looking
07:49 for very strong hiring trends in FY25.
07:52 And also in terms of skill set, sales, marketing,
07:56 customer service, these are the skills
07:58 that are on higher demand for the next four quarters.
08:02 And also in terms of location spread,
08:05 the strongest right now in terms of outlook is south and west.
08:10 But at the same time, the tier 2 and tier 3 cities
08:13 are also picking up across all the regions.
08:17 Because so far, we are seeing the maximum demand coming only
08:21 from metro cities in terms of formal jobs.
08:23 But now the tier 2, tier 3 cities
08:25 are also catching up in creation of formal employment.
08:29 Got it.
08:29 Thank you so much for that quick take on both the results
08:33 as well as the overall picture with regard to employment.
08:36 Thank you for that, Ramani, always insightful.
08:38 But time to slip into a very short break.
08:41 As we, of course, get closer to the interim budget,
08:44 we also continue to get your top industry voices.
08:47 Expectations from the budget.
08:49 As we slip into this break, listen
08:51 in to Neeta Kapoor of the International Spirits
08:53 and Wines Association of India and what she has to say.
08:56 We seek a reduction in the basic customs duty.
09:05 Currently, the basic customs duty
09:07 includes the agriculture and infrastructure development
09:11 says.
09:13 So currently, it's an exorbitant level of 150%,
09:16 which means 50% BCD and 100% AIDC.
09:20 And we expect this to be rationalized
09:23 to a more reasonable level.
09:26 Lower tariffs, aligned global standards, simple customs
09:31 procedures.
09:32 These are some of the initiatives
09:34 that we are looking at.
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