When we kept clamouring for jobs, talent hunters made plenty of money
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When you continued to demand work and more jobs, talent hunters in the country made loads and a lot of money.
Established company TeamLease Services increased profit by 168 percent compared to the same period last year to 66.34 rupees for the fiscal year ended March 31, 2017. Quess Corp demonstrated that its profits increased by 40 percent to Rs 113.44.
The shares of TeamLease this year increased by 84 percent, and Quess by 29 percent compared to the 22 percent growth in the Sensex test. Both were listed in 2016, the first Indian firms from this space publicly.
So, what contributed to this rally?
According to analysts, the insufficient penetration of the temporary personnel sector into India and the transition of the economy from the unorganized to the organized sector have become the main factors in the growth of the personnel industry.
Market experts continue to demonstrate a bullish view of the personnel business.
The temporary personnel market in India in 2014 was $ 38,500, which is expected to grow at the CAGR level by 19 percent by 2019, according to brokerage company Motilal Oswal.
In India there are about 2.1 million temporary workers in the organized sector, and it is estimated that in 10 years the demand for 9 million people is growing. It is expected that rapid growth in the retail, telecommunications, BFSI, healthcare and BPO sectors will contribute to this growth.
TeamLease is the market leader in a highly fragmented temporary personnel industry with a market share of 6 percent.
"The professional personnel industry is one third of the total staffing, and it is expected that it will grow faster in the next five years, by 22% in the CAGR," Motilal Osval said in the note.
Staffing is the foundation of an ecosystem of solutions for human resources. This industry supports enterprises in the field of wages, consulting, contracting, outsourcing processes, technologies for acquiring talent and other solutions for the workforce.
Motilal Oswal sees CAGR growth of 23 percent for the organized human resources sector in the next five years and 16 percent five years after that. This will mean a three-fold expansion in the organized market of personnel in five years and six times in 10 years.
The first five years would see accelerated growth due to a small base. Growth for five years after this will be associated with factors associated with GST.
Observers in the industry say that the introduction of GST will lead to a shift in the structure of organized players from 30 percent to 40 percent in five years and 50 percent in 10 years.
Historically, specialized personnel companies have a higher profitability compared to general-purpose personnel companies. This affected their significantly superior RoE and led to excellent estimates.
"On average, shares of these professional players are traded with a premium of 25-30 percent of the players' shares in the total staffing table," Motilal Osval said.
The broker has "buy" ratings in TeamLease and Quess Corp with target prices of Rs 1 990 and Rs 990, respectively.
HDFC Securities expects that revenue, operating profit and net profit of TeamLease will grow by 21, 45 and 29 percent CAGR for 17-20 years, respectively.
Brokerage agencies said that the skills development initiatives developed by governments will lead to an increase of 20-30 percent from the CAGR within the framework of an organized flexible staffing schedule over the next four to five years. TeamLease, being a leader in the flexible personnel market, is well prepared to take advantage of the transition from the unorganized to the organized sector.
Quess Corp is the leading integrated business services provider with a pan-Indian presence, 65 offices in 34 cities. It also operates in nine countries across North America, West Asia and Southeast Asia. It is a downgrading subsidiary of the Fairfax Financial Holdings Group, which runs through a subsidiary in India, Thomas Cook India.
"Quess Corp's high performance was mainly due to its strategic acquisitions in business and healthy growth in all areas of business. The company has a strong presence in highly developed business verticals.
The growing formalization of business, growing formal employment, the rapid transition of the unorganized to organized business in different sectors, combined with active management plans and expansion of the company's business and inorganic growth should have a positive impact on Quess Corp. shares. the current market price, "said Sanjeev Jain, deputy vice president for equity research at Ashika Stock Broking.
As of the end of June, mutual funds accounted for 2.87 percent and 17.10 percent of Quess Corp and TeamLease, while FII accounted for 9.02 percent and 17.05 percent, respectively.
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