Shares of TeamLease Services Ltd., a leading HR services company, plunged 10 percent on Friday to hit their lowest level in a year after the company reported a weak set of earnings for the December quarter.

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TeamLease reported a 14 percent rise in total revenue year-on-year at Rs 2,018 crore in comparison to Rs 1,767 crore in the year-ago quarter. Compared to the previous quarter, total revenue was up 3 percent from Rs 1,967 crore in the September quarter.

The company attributed a muted revenue growth to weaker festive demand in the December quarter compared to the September quarter and prior periods.

Profit after tax (PAT) dropped 5 percent to Rs 29 crore in the December quarter from Rs 30 crore a year ago. It was down 9 percent sequentially when compared with Rs 32 crore in the previous quarter.

The company’s EBITDA slid 16 percent year-on-year to Rs 32 crore from Rs 38 crore in the year-ago quarter and was unchanged from the September quarter.

EBITDA margins dropped to 1.6 percent in the December quarter compared to 2.1 percent in the year-ago period.

TeamLease said that its margins would be under pressure for the coming quarters as well given the soft demand, realisation pressure, and the NEEM (National Employability Enhancement Mission) impact.

To recall, the government discontinued the National Employability Enhancement Mission effective December 23, 2022, after which TeamLease had to release nearly 20,000 trainees. It has further exposure to 26,000 trainees under the program, whom clients have agreed to retain until further clarity emerges.

Meanwhile, the company also informed stock exchanges that a meeting of the Board of Directors is scheduled to be held on February 3 to consider the proposal for the buyback of equity shares.

After the earnings were shared, Kotak Securities lowered its target price for the TeamLease stock to Rs 2,275 from Rs 2,475 earlier while maintaining its ‘Reduce’ rating. The brokerage firm cut the company’s financial year 2023-2025 earnings per share (EPS) estimates by 6-11 percent.

Motilal Oswal also maintained its neutral rating on the stock but cut the target price to Rs 2,330.

TeamLease shares are trading at Rs 2,200 apiece, down 9.13 percent.

(Edited by : Rukmani Krishna)