TeamLease Services Ltd (NSE: TEAMLEASE) Q1 2026 Earnings Call dated Jul. 31, 2025
Corporate Participants:
Unidentified Speaker
Amit Chandra — Investor relations
Ashok Reddy — Managing Director and Chief Executive Officer
Kartik Narayan — Chief Executive Officer
Neeti Sharma — Chief Executive Officer of Specialised Staffing
Nipun Sharma — CEO PEO Degree Apprenticeship
Ramani Dathi — Chief Financial Officer & Financial Controller
Analysts:
Unidentified Participant
Deep Shah — Analyst
Amit Chandra — Analyst
Dipesh Mehta — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the timely SKU1 FY26 earnings conference call hosted by HDFC Securities. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your Touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Chandra from HDFC Securities. Thank you. And over to you Mr. Chandra.
Amit Chandra — Investor relations
Thank you Operator. Good evening everyone. On behalf of HDFC securities, we welcome you all to the team leads quarter one FY26 events call. Today we have with us the management team of Team Leads represented by Mr. Ashok Reddy MD and CEO Mrs. Ramidi CFO Mr. Karthik Narayan CEO of Staffing Ms. Niti Sharma CEO Specialized Staffing Mr. Mr. Nitum Sharma CEO PEO Degree Apprenticeship I will now hand over the call to Mr. Ashok Reddy for the opening remarks post which we can open the full of open the floor for the question answer session. Thank you. And over to you Ashok.
Ashok Reddy — Managing Director and Chief Executive Officer
Thank you Amit. Good evening and thank you all for joining the call. We have had another quarter of growth at the group level. We added about 5,000 headcount and it has been a quarter where we have grown in all the three businesses of staffing, degree apprentice and specialized staffing. We have had a net growth in headcount in all the three businesses. We also added over 110 new logos across the businesses. And despite the persistent macroeconomic headwinds affecting the BFSI and IT services verticals, we have delivered EBITDA growth of nearly 39% year on year, quarter on quarter.
EBITDA got impacted on account of seasonality aspect of the edtech business that we see every year. The resilient demand from enterprise clients and tech profiles in non tech companies and global GCCs have helped sustain the growth momentum largely for us. With a sharp focus on operational efficiency, the diversified service mix and financial discipline, we are gearing up for a steady profit expansion trajectory for the remainder of the fiscal year. I think I will have the business as detail a little more specific to the three businesses and then finance before we move on to the questions. On to you Karthik.
Kartik Narayan — Chief Executive Officer
Yeah, thanks Akshub. Q1 FY26 marked the beginning of recovery for some sectors while others experienced mixed performance. The efforts we made last year to win new logos began to bear fruit early in the quarter particularly within the BFSI segment. With our strong hiring capabilities, we are optimistic about delivering value to our clients. Throughout the rest of the year. The consumer durable vertical, which was expected to perform strongly in Q1 and traditionally that’s a big quarter for them, was impacted by seasonal factors and saw moderation around mid quarter and I’ll kind of share a little bit more about it. As we move ahead.
That said, our general staffing business continued to deliver, closing the quarter with a net headcount addition of approximately 3,000 plus reflecting 5% year on year growth. Notably, a third of these additions came from new client acquisitions. Top line momentum remains strong, revenue growing 11% year on year supported by solid execution and disciplined operation management.
General staffing and life services therefore posted 11% year on year growth at the EBITDA level across verticals. Banking and financial services, one of the key components of the services sector, has continued to be a mixed back since Q3FY24. We saw some hiring at the beginning of the last financial year, but that tapered off following the RBI’s cautionary stance and advisory related to NBFCs and FinTech disposing small ticket unsecured loans.
To put that overall sector into perspective, some of the major banks hired only half as many people in FY25 compared to FY24, indicating the extent of hiring containment by leading financial institutions. We had called out in our may result that the recent positive policy actions from the rbi, such as the revision in credit risk weightages and relaxed norms for NBFCs coupled with rate cuts might result in some recovery. We are noticing that some of the NBFCs have resumed hiring, though at a slower pace. Some of the other parties, microfinance institutions, fintech players are gradually regaining momentum, though they remain well below previous hiring levels.
Credit card business specifically still remains significantly subdued. It’s too early to say how this will pan out, but we are positive about this, combined with the fact that income tax relief will lead to a consumption pickup and the need for asset products from financial institutions. Consumer business on the other hand, which is one of the larger verticals comprising FMCG and retail. Despite some headwinds there, high input costs, subdued urban demand, we were noticing companies reporting sequential improvement in volume in Q4, largely led by semi urban and rural growth. While April in itself started on a good note, we saw unseasonal rains and weather impacting the sale of FMCB goods, which is largely air conditioning, which resulted in muted growth for the rest of the quarter in terms of headcount addition for us in that sector.
So in summary Q1 we are seeing a mixed bag of sectoral growth. BFSI grew by 6.4% in terms of headcount, FMCG degrew 4.4%. The rest of them FMCD, telecom, retail, E Commerce remained flat. Sales aggression continued with us closing the quarter about 44 new logo signers, 60% of them coming up on available backup side. On the hiring side for the quarter we delivered about 17,000 plus new joinees, 10% higher than the last quarter and 25% of them hired through non recruiter channels. 24% of these cross joinings are first time employees.
Another key pillar of our business strategy is driving optimization and leverage, essentially doing more with less using technology key leverage and this continues to be as we move into Q2 we expect some of the more muted sectors around FMCG, FMCG Telecom and PFSI to accelerate and in conclusion I can say that while we have delivered a year on year, growth in our gender scarping business this quarter despite sector we have about 20,000 plus open positions and our continued focus on driving productivity especially in sales and hiring combined with the momentum we are seeing from our digital transformation gives us strong conviction about the year ahead. With that I would like to hand it over to NITI for the specialized staffing.
Neeti Sharma — Chief Executive Officer of Specialised Staffing
Thank you Karthik. The IT hiring environment in Q1 of this year remained cautious with muted demand from traditional IT services companies. However, we’ve seen signs of growth in the tier 2 IT firms, product companies and digital first organizations. Amidst this backdrop we’ve delivered improved momentum marked by net headcount, additional better delivery efficiency and strong customer traction. We closed the quarter with a net headcount addition of about 115 resources, a combination of both India and global headcount increase reflecting healthy growth in delivery capabilities aligned to strategic demand. We’ve retained our margin discipline by maintaining cost control, focusing on high value skill placement and improving recruiter productivity.
In the last quarter we onboarded 11 new clients consisting of five DCCs including strategic logos across global consulting firms, life science and pharma, manufacturing and engineering customers. Our client pipeline remains robust with high quality deals in advanced stages of closure, reinforcing visibility soar H2 and FY26. The GCC segment remains a cornerstone of our business both in terms of volume and stability, contributing approximately 46% of headcount and 64% of net revenue. We continue to deepen engagement across 75 GCC customers of ours with high activity in BFSI, healthcare, high tech and engineering segments despite broader market softness.
GCC hiring remains steady reinforcing the structural strength of this model. Our build operate transfer model continues to scale as well. In quarter one we expanded engagements in verticals such as bssi, IT and Product Engineering. We also strengthened our DCC enablement offering through ecosystem partners across infrastructure, legal and technology positioning us as a full stack. Workforce Solutions Partner Tier 2 GCCS and new delivery hubs are expanding across India creating consistent talent demand in newer geographies. Project based Just in time Hiring is on the rise and our Pan India network is helping us deliver to these new requirements.
Also, niche digital skills in AI, ML, cloud platforms and cybersecurity continue to see rise in demand and we’re proactively investing in sourcing and delivering on these skill sets. Recruiter productivity continued to improve aided by automation, first workflows, focused hiring systems and upskilling of the recruiters. We saw further improvement in fulfillment cycles and sourcing efficiency during the last quarter. Our global business contributed meaningfully in this quarter with close to 14 crores in gross revenue and over a crore in net revenue with a positive ebitda. The combined value of India delivery and Singapore and UAE presence has opened up new revenue opportunities for us.
We are leveraging this synergy for consulting led hiring and end to end delivery from India into global markets. In summary, while broad based IT hiring faces macroeconomic headwinds, a selective focus on tier 2 IT services companies, expanding GCCs and non tech firms undergoing digital transformation positions us for continued growth and resilience in the coming quarters. Q1 marks a period of improved execution productivity and strategic pipeline building, reinforcing our strong foundation and increasing global traction. With this, I hand this over to NIPUN for further conversation. In the end.
Nipun Sharma — CEO PEO Degree Apprenticeship
Thank you Neeti.The government renewed focus on skilling and vocational education highlighted in the new budget is encouraging. Apprenticeships are gaining momentum with NSDC data showing an 18% annual growth in apprentice adoption over the last three years. At team Lease degree apprenticeship, we believe the answer to India’s skill gaps lie in formal work relevant education funded by industry and delivered through education and structured partnerships. Our program span NATS, NATS and work integrated learning programs and we partnered with 22 universities to offer degrees, diplomas and short term certifications across white and blue collar roads. In Q1, TSGA added about 1700 appendices across NAS, NAT and WIP driving an increase in operational pap and priorities.
12 of these 1472 additions came from our learning led program. We onboarded 14 new client logos in Q1 Promotion of learning solutions remains a focus area. Amongst existing clients, 22% have adopted learning solutions. This growing adoption reflects the tangible impact learning has on improving productivity, reducing attrition and enhancing apprentice engagement. Our key focus this quarter has been monetizing our apprenticeship linked product lines including managed training services for companies building entry level talent pipelines. The market response has been encouraging. We continue our outreach with events and roadshow to advocate for degree apprenticeships as a sustainable talent strategy.
These efforts led to active engagement from 94 clients and prospects in Q1. Recent government announcements reinforce our direction. The Central Apprenticeship Council’s recommendation for inflation linked stipend increases, the rupees 60,000 crore ITI ambiguous plan and the launch of SOAR so scaling for AI readiness signals strong policy support for apprenticeship and employees. Looking ahead, we see growing interest in education, integrated apprenticeships and WIPs across industries such as food processing, healthcare, financial services, ideas, DPO, pharma etc. We are well positioned to build on this momentum in the coming quarters. With this I hand it over to Rahim.
Ramani Dathi — Chief Financial Officer & Financial Controller
Thank you Nipur. Good evening everyone. At group level we have added 5,000 billable headcount in Q1FY26 including 110 net additions in specialized housing. On a year on year basis we have added about 19,000 headcount despite headwinds in DFSI and IT. With respect to hiring trend, almost 65% of the gross joinees in the quarter were from tier 2 tier 3 cities with an average salary of 21,000 versus total base average of 27,000. Historically metros and tier 1 cities used to contribute to 60 to 70% of gross joinees in starting business. The change in this mix has marginally impacted the TOQ revenue growth in staffing.
Overall revenue grew 12% year on year and EBITDA by 39% year on year. This demonstrates significant operating leakage and also excluding inorganic contribution. Year on year EBITDA growth stands at 34%. All the new acquisition integrations are completed and have Contributed by about 4% in Q1 EBITDA and 1% in the Q1 top line. EBITDA on a quarterly basis got impacted by seasonality in edtech business as well as core employee salary appraisals in this quarter. Year on year PBT and PAT grew by about 30%. CSO and staffing business stands at 7 days and the overall group DSO at 17 days.
Funding exposure in the staffing business is maintained at 14% with high cash conversion to EBITDA. Free cash balance stands at 310 crore net of cap expense over the quarter. We have received lower withholding certificates at the start of the financial year and completed IT assessments till assessment year 2324, along with the refunds till the year of assessment. All balance sheet metrics are stable and steady. We can now move to specific questions. Thank you.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press STAR and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press STAR and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Deep Shah from BNK Securities. Please proceed.
Deep Shah
Yeah. Hi. Thank you for the opportunity. So the first question is on specialized staffing. So could you share some light. So I heard the numbers, but could you share some light on how is the margin profile or the business profile different in India versus overseas? And what kind of traction are you seeing in India and overseas? Because it seems that this business is done well, it can help us offset a lot of weakness on the IT front. I ask the same question after this.
Neeti Sharma
So Deep. Thank you. The global numbers right now are very small. So for us to start looking at a trend of a comparison within India to global is too early for us. Having said that, when we’re looking at hiring from India, the idea is that wherever there are global requirements, if you’re able to use our delivery capabilities, which are India delivery capabilities, we should be able to do better in terms of our execution and margin. So that’s the reason why we actually even forayed into the new geographies. But Ramni can add in case there’s.
Ramani Dathi
Something in terms of absolute numbers. The rate cuts that we are currently getting in our Singapore geography are almost five to six times higher than the India ones. But in terms of margin percentage, as of now, our Indian clients are doing much better. But we have a steady pipeline of onboardings in Singapore as well as Middle east in the coming quarters. So wherein the margin expansion can continue.
Deep Shah
Right. And Rami, if I heard you correctly, you said that the acquisitions contribute to 4% of overall EBITDA?
Ramani Dathi
That’s correct, yes.
Deep Shah
Right. Second question is, is on these other hr, other businesses. So would it be fair to say that the growth we’ve seen in edtech is more a function of the NEP, which was delayed last year, which is 1q was very poor. Would there be a fair statement to make? So this growth should not be extrapolated going ahead in the tech business particularly?
Ramani Dathi
No, not really. Because overall in ethic, top line, full year revenue, there has been a 40% growth year on year. So it’s not just an attrition because of the last year Q1 impact.
Deep Shah
Okay, fair. And within the red tech side. So what would be the steady state say growth projections that you would have both on actually HR and red tech? And when should we expect that these businesses at what scale should they comfortably break even?
Ramani Dathi
No, they should maintain a revenue growth of 25 to 30% consistently and with an EBITDA margin of anywhere between 6 to 8%. So this is at HR services segment level.
Deep Shah
Understood. So, so yeah, I understand that. But I’m seeing within that HR and red tech would you be able to provide say at what scale would HR patent, red tech, kind of. So I think red tech are already breaking even. But HR tech, at what stage would you believe that it starts to break even and take care of itself?
Ashok Reddy
Just this, Ashok. The Regtech and edtech businesses are profitable. Edtech has an element of seasonality, but at a cumulative level for the year ended positive for last year and will be positive this year. The HR tech is really where investments are happening. And we believe that by mid next year we will be EBITDA positive.
Deep Shah
Understood. Perfect. So by mid next year. Fine. Thank you. Thank you.
Deep Shah
And all the best.
operator
Thank you. The next question is from the line of Amit Chandra from HDFC Securities. Please proceed.
Amit Chandra
Yeah, thanks for the opportunity. So my first question is on the, you know, is on the, is on the general stuffing segment. So you mentioned that most of the headwinds that you’re seeing in this segment have been behind and we have seen an addition of around 5,000 associates including BA. So how is the pipeline for second quarter looking? Because traditionally second quarter has been the strongest quarter for us and we mentioned that we have 20k open position, so is it higher than what we had it at same point of time last year. And also we have mentioned that 60% of the new clients that we are signing up are on the variable markup model. So when we start seeing the benefit of this on the overall PAPME for the general staffing.
Ashok Reddy
Amit, I’ll just answer the last one before Karthik takes over the answer to the earlier two. The incremental sign ups from a volume perspective are relatively small. So I think the overall impact on the PAPM from the variable model will take some time to kick in because a larger element of the growth still comes from the enterprise clients who are on a fixed PAPM and a lower papm. But I think the element of driving new sign ups continuously in the variable model in the long run will start to benefit. Having said that, on the specifics of the open positions and growth, Karthik will ask.
Kartik Narayan
Yeah. So Amit, couple of things. One is from a growth perspective two or three things that we are seeing. One is clearly open positions coming in from some of the sectors which largely in H2 last year had come down significantly which is banking, finance and also the consumer business. We are seeing that open up. So are we seeing growth green shoots coming through to Q2? The answer to that is yes, we are definitely seeing that and quite positive in delivering for Q2 from an open position perspective. One is, is it the same as last year? I would still say it is lower than last year.
Last year if I recall it well it was north of about 30,000 odds. It’s roughly about 20,000 odds around this time. That is again predominantly due to some of the slowdown which has occurred in banking finance. Right. Some of our growth is also coming through because we are gaining wallet share in some of our existing accounts. So irrespective of how our customers are growing because of the growth in volunteer, we’ll be delivering a positive result through Q2.
Amit Chandra
Okay. And also we have earlier guided or mentioned that the steady state volume growth for general staffing could be in the range of 15%. Now we are at 5 to 8% kind of a growth number. Obviously we have headwinds specifically from the BFSI and telecom. But when we expect the volume growth to reach to 15% kind of a number or is it too optimistic to.
Ashok Reddy
Q2 is quite positive Amit, from an open position and a number outlook. So I think if the Q2 kind of tailwind holds into Q3 we should be able to kind of drive the numbers up.
Amit Chandra
Okay. Okay. And Ramni, if you can give the PAPM number for this quarter and also in terms of in terms of margin tailwinds are are there any margin tailwinds that we have in the general staffing apart from the variable markup that we have signed and is there any other margin levers that we can see coming up here?
Ramani Dathi
The PABM has been flat on a quarter on quarter basis, Amit. And as far as payments are concerned. So we are working on other value added services both to clients as well as associates. So that is going to help us expand profits as well as margins in the next two to three quarters. But other than that, with all fixed costs now being fully Absorbed, the volume growth should directly contribute to a higher operating lease rate and better productivity. So that also becomes a tailwind going forward.
Amit Chandra
Okay. Okay. So coming on to the specialized staffing segment, obviously we have seen good recovery there and this is mostly led by the higher GCC contribution. So if you can split out in terms of what is the revenue split between India and global in this quarter? So you mentioned 14 crores is global. It is around 8%. Is it right around 8% of the specialized staffing is from global right now. Okay. And how do you see this changing over the next say one year in terms of the pipeline and the traction that you’re seeing both from the Indian and global trends?
Ashok Reddy
It will broadly hold at 8% to 10% for this year. Amit, Because I think we are expecting the internal, I mean the domestic growth also to sustain. So I think both will run in tandem at the current point in time. But as we build more clients and expand the element of the presence and delivery capability in Singapore and other places, then we could look at that growth kind of outpacing the domestic. But this year I think we will look at it being around 8 to 10%.
Amit Chandra
Okay. And in the specialized staffing, we have seen the margins being soft in this quarter. So any specific reasons for that? And what is the steady state kind of a margin level that you can expect for the specialized staffing business?
Ramani Dathi
So specialized staffing, two reasons. So one is this quarter we have our annual employee appraisals for core employees. So that has an impact. And also we are taking up some MSP mandates. So bearing the margins, the gross margins are on lower end, but at the same time we don’t have any associated cost for that. While on overall margins it’s tied you to on absolute profits, it’s still accretive.
Amit Chandra
Okay. Okay, thank you. I’ll be back in the queue.
operator
Thank you. Before we take the next question, we would like to remind participants that you may press Star and one to ask a question. The next question is from the line of Dipesh Mehta from MK Global. Please proceed.
Dipesh Mehta
Yeah, thanks for the opportunity. First, on general staffing, I think you indicated some of the segments where you are seeing weakness, like BFSI Telecom. I’m not very clear if you can give sense about where you are seeing signs of recovery entering into quarter two and beyond and what factors, let’s say still one need to be watchful in terms of the anticipation of that acceleration kind of thing. So that is first on the industry side, if you can give that so some sense. Second Question is about the operations where we are seeing steady profit expansion trajectory for the remaining of year.
Are we indicating profit growth to accelerate into next three quarters compared to where what we deliver in quarter one or how one should understand the statement and last question is about specialized staffing. I think you partly answered about some weakness what we observe in quarter one. But on steady state basis where the historical range which we used to operate in terms of margin profile upwards of 7 percentage is a good range to look for specialized traffic. Thank you.
Kartik Narayan
Yeah. On the general staffing part I think there are three aspects. But you know, sectorally speaking the first part is the BSSI growth is coming back in some of the sub segments within BFFI, namely NBSCs. So that’s one part of it. And in terms of the three aspects to it, one is growth which is taking place where the overall hiring is going up in this. So that’s BFSI to some extent. Hopefully with the festive season up starting August 15 till about Diwali Consumer, both consumer durables as well as FMCE business, we are expecting it to kind of come back.
So those have been flattish for a while and especially in Q1 that I called out because of unseasonal rains. The second thing which I’ve spoken a few minutes back was on wallet share. So it’s not just you know, growth which is taking place even within existing customers. We are gaining wallet share. So that is what will lead to positive for us. And the third aspect especially in FMCG is formalization which is continuing to take place. So even some of our existing customers or increasing their formalization of their workforce, so that is also adding to the positive momentum. So all the three aspects put together is what will contribute to growth in Q2.
Ramani Dathi
Hi Dipesh, on profit expansion Q1 we have maintained about 39% of year on year growth also including about 4% contribution from inorganic. But for the rest of the quarters in the year we should be able to maintain at least a 30% EBITDA growth year on year. I think there is one more question on specialized staffing.
Neeti Sharma
Yeah. So Dipesh gets about 7. 7.2 is the right number and I think we’ll get there towards the end of the year.
Dipesh Mehta
So broadly, what for the last question, just to get more clarity, what you are indicating it would be a gradual recovery from where we are today to where we exit. Hundred bits kind of swinging will be greater and what will drive it? If you can give a factor which will contribute to that expansion.
Neeti Sharma
So more number of customers, you know that are giving us high value mandates. Secondly, different product mix that we are bringing to the table which again are higher margins. You know, along with the staffing mandates that we are doing. Like I called out in my, in my conversation, the build, operate, transfer, the bot model that we are working with, GCCS does give us a higher, you know, margin percentage. So just a combination of different products as well as higher, you know, value mandates on IT skills is something that we’re looking at improving our margins and.
Ramani Dathi
Also economies of scale because the fixed costs are also fully absorbed in business. So that will also help us in margin expansion.
Deep Shah
No, I understand, but some of the. Factor which you alluded then in first place we should not have seen some correction in margin. Right. Because we were always operated about 7 though some of the mandate which we alluded. I understand that part and maybe appraisal is always the annual kind of thing. So I’m not very clear why it came down.
Ramani Dathi
In fact we lost almost 40% of our headcount. We did almost 9,000 plus. Headcount came down to 6,000 especially with IT services impact. So that’s when our margin got diluted from about seven seven and a half percent to 6%.
Dipesh Mehta
Fair. I was more referring to sequential but I get the sense. Thanks.
operator
Thank you. Participants who wish to ask a question may please press star and one at this as there are no further questions from the participant. I now hand the conference over to Mr. Ashok Radiz for the closing comments. Over to you, sir.
Ashok Reddy
Thank you very much. I think as we’ve called out, we are seeing green shoots. We have had a quarter where all three businesses, businesses have grown in headcount. We are seeing green shoots of demand coming in for the DA business and the staffing business. And we expect that to kind of hopefully sustain out into the coming quarters. And I think a large element of the supporting fixed costs will stay constant which will enable us to influence and work on the profitability. A lot of the technology initiatives also will play out from the hiring perspective and the operations side as we go forward and we expect that also to create leverage into the coming quarters.
We are quite bullish about the coming quarter with the current outlook on open positions that we have from the customers and the translation of the delivery capabilities that we have built. So we will continue to work on these fronts for profitable growth and come back to you in the coming quarter. Thank you very much.
operator
Thank you on behalf of HDFC Securities. That concludes this conference. Thank you for joining us. And you may not disconnect your line.