TeamLease's 1.04% operating margin leaves profit reliant on other income
Consolidated Q1FY27 profit included Rs 21.81 cr of other income, while management flagged higher PF and gratuity costs from the new wage definition.
Filed 29 Jul 2026, 16:46 IST · after market close · TEAMLEASE (TEAMLEASE)
Key takeaways
- Consolidated Q1FY27 operating margin was 1.04%, as expenses of Rs 3,003.22 cr nearly matched revenue of Rs 3,034.69 cr.
- Other income of Rs 21.81 cr made a substantial contribution to consolidated pre-tax profit of Rs 36.26 cr, while the tax rate was 4.99%.
- Management said Specialised Staffing revenue grew 21% YoY and added 40 client logos, including 15 GCCs.
Thin operating spread, mixed profit quality
Revenue and expenses were nearly matched in the consolidated quarter, leaving only Rs 31.47 cr of operating profit and a 1.04% operating margin. Profit quality was mixed: other income of Rs 21.81 cr made a substantial contribution to pre-tax profit of Rs 36.26 cr. The 4.99% tax rate also supported the conversion of pre-tax profit into Rs 34.45 cr of net profit.
Labour-code changes are the key cost issue
Management said the new 50%-of-CTC wage definition raises PF and gratuity costs per associate and requires payroll and contract changes across clients. The company described this as a temporary cost and change-management burden for the year. Management also said variable-engagement onboarding should support margin resilience if demand softens.
Client additions span all major staffing verticals
The presentation said General Staffing added 28 new logos, with more than 65% onboarded under the variable-engagement model. Degree Apprenticeship added 18 logos, while Specialised Staffing added 40, including 15 GCCs. Management said Specialised Staffing revenue grew 21% YoY in Q1FY27, with EBITDA margin held at around 6%.
Results came after market close
The consolidated results were filed at 16:46 IST after market close. The stock's immediate response is therefore not covered here.
Q1FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q1FY27 |
|---|---|
| Revenue | ₹3,035 cr |
| Other income | ₹22 cr |
| Expenses | ₹3,003 cr |
| Operating profit | ₹31 cr |
| Operating margin (%) | 1.04% |
| Interest | ₹4 cr |
| Depreciation | ₹13 cr |
| Profit before tax | ₹36 cr |
| Tax | ₹2 cr |
| Net profit | ₹34 cr |
| EPS (₹) | ₹20.79 |
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Specialised Staffing revenue grew 21% year-on-year in Q1FY27 while EBITDA margin remained around 6%.
- General Staffing added 28 new logos in Q1FY27, with more than 65% onboarded under the variable-engagement model.
- Degree Apprenticeship added 18 new client logos, with momentum specifically in the GCC segment.
- Specialised Staffing added 40 new client logos, including 15 GCCs, during the quarter.
Guidance & outlook
- Variable-engagement onboarding should support margin resilience if demand softens.
- GCC-linked demand is more discretionary and exposed to global technology capex cycles.
Expansion
- TeamLease acquired TSR Darashaw, entered HR technology and expanded to Singapore and the UAE in 2024-25.
- TeamLease built RegTech, EdTech, IT infrastructure and e-hire verticals through acquisitions between 2017 and 2020.
New initiatives
- TeamLease entered the HR technology space through the acquisition of TSR Darashaw.
- TeamLease has built RegTech, EdTech, IT infrastructure and e-hire verticals through acquisitions.
Competition
- The company says uniform compliance requirements favour large, organised players such as TeamLease over unorganised contractors.
Problems & risks
- The new wage definition raises PF and gratuity costs and requires payroll and contract rework across clients.
- The labour-code changes create a temporary cost and change-management burden this year.
What to watch
- Whether operating margin holds above 1.04% as PF and gratuity costs are reset under the new wage definition.
- Whether Specialised Staffing sustains the 21% YoY revenue growth and around 6% EBITDA margin cited for Q1FY27.
- Whether General Staffing keeps variable-engagement onboarding above 65% of its 28 new logos.