SIS Ltd. share price target

India security solutions revenues increased 3.8% QoQ (25.3% YoY) to | 908.9 crore. EBITDA margin declined 10 bps QoQ to 6.05% driving EBITDA growth of just 2.1% QoQ. Segment headcount increased by 3222 to 1,57,922 reflecting a QoQ increase of 2.1%. The intent of the management is to dissociate revenue gradually from headcount by focusing more on technology (Tech SIS), productivity and outcome-based solutions. Revenue per branch was | 1.75 crore excluding acquisitions with every single branch having shown growth in 9MFY20. SIS has been able to drive operating...

Security and Intelligent services (SIS) reported better than expected numbers on both margin and revenue front. The revenues in Q3FY20 grew by 4.6%QoQ and 18.6% YoY at Rs. 2,178 crs. Net income also showed a robust growth of 2.8% QoQ and 32.5% YoY at Rs. 78 crs.

Security and Intelligence Services (India) Ltd (SIS), is a leading security services company in India and Australia with leadership positions in cash logistics and facility management services.

(India) ltd. (SIS) is the largest security service provider in India, providing security solutions and business support services to a wide range of customers across India and Australia. Apart from security services, the company provides cash logistics and facility management services....

We met with management of SIS. Our earnings growth estimate of ~38% CAGR over FY18E-20E stems from our confidence that SIS can deliver: (1) 25%+ sales growth in India security based on its current monthly run-rate, (2) Margin expansion across segments

SIS reported Q3FY18 sales of Rs 15.3 bn (+35% YoY), driven by robust organic growth of 22% YoY. Core EBITDA margin expanded 20 bps to 5.5%. PAT at Rs 465 mn grew 113% YoY (in line) on higher operating profit, reduced interest cost and tax.

SIS is the 2nd largest security services provider in India, and the fastest growing security services provider in India. Between Fiscal Years 2013 and 2017, revenue from operations from the security services business in India grew at a CAGR of 29.67%. The security services market has historically grown at 2.5- 3x GDP growth rate. Hence, India, being the fastest growing major economy in the world, offers significant opportunities for security services. Moreover, Rising security concerns arising out of increasing terror threats faced by countries, and a low police-to-citizen ratio, have rendered the system incapable of catering to the needs of a growing population. These factors, coupled with the nation’s steady economic progress will drive the growth in demand for private security services, domestically and globally.

Estimating the share price of the company as per P/E valuation, putting the estimated P/E of FY19E at 49x & the estimated EPS at ` 29.35 ,the estimated share price for next 1 year tenure turns around to be ` 1440. Therefore, we recommend to BUY.

The need for security has grown exponentially, especially with pan-India customers needing security coverage for their physical assets. There exists a massive scope for frontline security services, which is being drive by the following :Strict enforcement of regulations such as minimum wages, Provident Fund norms, gratuity, insurance, among others. Increase in private infrastructure such as office complexes, industries and malls, among...

Security and Intelligence Services (India) Limited (SIS) incororated on January 2, 1985 is a leading provider of Private Security and Facility Management Services in India. The Private Security Services comprise of Security Services, Cash, logistic services, Electronic...