The shareholdings of FII’s is increasing rapidly… please explain?
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Investment in emoha senior is also a very good move. More investment woukd have been better (5% is too low)
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Why is the market not giving premium to the stock price, despite such good revenue growth?
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Does anyone know why management wants to use leverage in the balance sheet even when there’s no Capex as such involved?
Its hurting the bottom-line.
Can someone please explain what is “no coverage of statutory margins”
This is from 2024 Annual report
This is most probably related to contracts that give them a fixed margin over cost in which the wages and other technological cost gets completely passed onto the customer in case of events like minimum wage increase or installation of new equipment, etc.
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Consider it as a steady performer,
Growth will be 1.5 to 2X of GDP growth.
Will Maintain ROE of 15%.
Possible to spinoff cashlogistic business.
Interview with the Promoter, https://www.youtube.com/watch?v=Tfb9AgDi8_Q
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Investing in Safety: How SIS India is Shaping the Future of Security Solutions
Security services have become an integral part of our daily lives, from the friendly greeting of a security guard at your office to the vigilant presence at every apartment complex. In today’s unpredictable world, companies like Security & Intelligence Services (India) play a pivotal role in enhancing safety and security.
With a wide range of offerings—such as manned guarding and cash logistics—SIS not only protects assets but also encourages confidence in investors. As the demand for robust security solutions continues to grow, SIS is well-positioned to capitalize on this trend, making it a noteworthy stock to consider.
Industry Overview- The Indian security services market is set to hit ₹1,574 billion by 2024—because who doesn’t want to pay to keep their stuff safe? With more people moving to cities and the rise of tech like data analytics, security companies are eager to offer personalized services. Now, clients want more than just a guard; they want a complete security package with one point of contact. It’s all about convenience! As we move into this tech-driven future, security is becoming less about just safety and more about high-tech solutions. Read how SIS is providing complete packages of security solutions to the client in this blog.
Business Overview- Security & Intelligence Services (India) is a premier provider of security and related services across the Asia-Pacific region and is well-equipped to meet the growing demand for security and facility management solutions. Segments consist of -
· Security Solutions- SIS is a leading provider in the Asia-Pacific region, offering a wide range of manned and technological security solutions across India, Australia, New Zealand, and Singapore. SIS Deploying AI in their services because on the client application side, AI Deploying is huge implication because as it is not just a Manpower based business it’s Manpower plus technology so if you have a CCTV which has a lot of artificial intelligence built into it that brings far more efficiency and reliability and a lot of analytics that the client appreciates.
· Facility Management- The company operates four brands—ServiceMaster Clean, Dusters Total Solutions, RARE Hospitality, and Terminix—providing services like housekeeping, integrated facility management, HVAC maintenance, and pest control. In facility management, SIS currently emphasizes soft services (Includes usage of a facility such as cleaning and catering), but the higher margins are associated with hard services (Includes managing the physical aspect of a facility such as building maintenance and plumbing). To enhance profitability, the company plans to increase its focus on securing hard service management contracts in the future. Orders in FMS are not at a steady growth rate, shredding a lot of contracts having lower margin. Expected to grow this business at 18% CAGR organically.
· Cash Logistics- In a joint venture with Prosegur, SIS offers comprehensive cash logistics services, including cash in transit, doorstep banking, cash processing, ATM replenishment, and vault solutions. It operates 3,000+ cash vans and 60+ vaults covering 300+ cities across India. The company is looking to separately list the Cash business by September next year.
Talking about the financial performance of the company-On a consolidated basis, revenue for SIS Group increased by 5.1% year-on-year basis to INR3,130 crores. While EBITDA took a small hit of 1.2%, again, on a Y-o-Y basis to INR137 crores. India business expected to grow at 15% CAGR. Doubling the Indian business to about 15000 Cr in the next 5 years. International business will grow at a much lower growth because of labor shortage issue in the continues to persist.
Future Outlook- Growing at CAGR of 15% and management expect the same growth to continue in future. In the festival season, expecting higher demand from the second half of FY25. There are few segments, especially e-commerce segment, big giants typically have requirement two three times the normal security guards that they want, and SIS is ready to provide. EBITDA margin guidance remains at 6%. The company has encountered challenges in its international business (Facing labor shortage in Australia), expected to normalize in coming 2 quarters. In securities, the working capital cycle is 84. In an ideal scenario they would like to bring it close to 70.
Technical View- SIS is showing a neutral trend on both the weekly and monthly charts, with the price consolidating in the range of 402-430 over the last few weeks. It has reversed from a strong weekly support level at 398, having found support there four times. Currently, SIS is below the 100-week moving average at 421.8 and is waiting for a breakout from a triangle pattern. Once this breakout occurs, the price may experience an upside rally, with immediate resistance at 430. If it closes above this level, can expect further aggressive movement towards 560-647. Conversely, strong weekly and monthly support levels are found at 398-346. Investors can consider accumulating at the current price (25% to 50%), and if a correction occurs in the demand zone of 398-346, they can average by adding more. The recommended holding period is 6 to 9 months.
Conclusion, Security & Intelligence Services (India) is well-positioned to grow in the expanding security market, projected to reach ₹1,574 billion. With a strong focus on both manpower and technology, SIS is ready to meet the rising demand for comprehensive security solutions. Despite facing challenges like labor shortages, the company aims for a 15% growth rate and is set to capitalize on upcoming opportunities. Investing in SIS could be a step towards a more secure future for both individuals and businesses.
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I think Krystal integrated is better placed given its growth and good relation with CM of Maharashtra
SIS Limited | Management Guidance
Says Will announce acquisition-deals in the next 1-2 months
India Security Biz EBITDA will cross 6% in next few quarters
Facility Management EBITDA will be close to 5% in next quarter
Have a kitty of 100-200 Cr for M&A
Watch here - https://youtu.be/7ewX6C44P14
Board approved buyback through tender route at Rs. 404 per share for an amount not exceeding 150 Crores. So, up to 2.57% of the total outstanding equity shares would be bought back.
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SIS set to acquire A P Securitas.
AP Securitas is engaged in providing security & facility management services. A 51% stake is being acquired now for 73.40 Crores, and the balance will be acquired by the year 2029. Revenue in FY25 was 1119 crores with 37000+ employees, so a P/S multiple of 0.13 looks cheap, but we will have to wait for clarity on margin profile of the business.
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SIS Q2 FY26 Concall Notes
- Monthly Revenue rate now is Rs 1300 Cr, translating to Rs 15,600 Cr yearly run rate. Over last 10 years, revenues are growing at decent pace. The PAT run rate can start hitting Rs 400 Cr from FY26
- Securities India / Facility Management has EBITDA margin range of 4 to 6%. Securities International (Australia) has historical EBITDA margin range of 3 to 4%.
- Share of India : Internation business is 50:50%, share of internation business to go down going forward. This is because India business is growing much faster than internation business.
- Acquired AP Securitas to get better access to banking / Logistic business where it is strong. Revenue 1000 Cr, PAT 22Cr, 35,000 employees. Acquisition EBITDA multiple 8.3 times, however, SIS paid 51% stake for Rs 72 Cr, rest to be acquired overtime. Looks pretty cheap acquisition, which means I am missing something.
- After acquisition, SIS revenues will be 2X its nearest compitetor in Securities market.
- Cash logistics IPO on track, it will help SIS reduce debt.
My 2 cents:
Industry characterstic:
a) Low barrier industry with hardly any differentiation.
b) Scaling a company is major challenge.
c) Razor thin margins. SIS is able to generate EBITDA margins of 5%, Quess / Teamlease are not able to touch 2% EBITDA margins even with huge scale, probably because SIS is not staffing company.
d) Growth outlook for industry and SIS in particular looks good with formalization of economy.
e) Industry level attrition is quite high at 35%
f) Govt shift of focus from Agri to Blue collar workers may help the industry.
g) Wage inflation good for industry and SIS in particular, as its passed to the customer.
Business Characterstics:
a) Annuity business with strong predictable revenues
b) Large network with more than 3 Lakh empoyees
c) Revenue base diversified across multiple industries
d) 21 residential tranining academies , capable of training 3000 people at one point of time.
Company view:
a) SIS has proved it can scale very well with reasonable margins.
b) Biggest asset is the Jockey (Rituraj)
c) Valuations dont look expensive
Disclosure - Hold Tracking Position
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All the rules of the 4 Labour Codes to be notified in next 45 days with a national floor level minimum wage. Any hike in minimum wages will positively affect SIS.
https://www.moneycontrol.com/news/business/economy/labour-codes-notified-govt-to-form-panel-to-fix-national-floor-wage-frame-rules-in-next-45-days-13690469.html
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Big Benefits to SIS from labor code implementation acc to cnbc tv18 interview of Rituraj Sinha
- Formalisation will get a big boost and more level playing field between organised and unorganised. Will benefit SIS
- National floor of min wage can increase min wages and reduce disparity between wages across states. Any increase in wages will be positive for higher revenue growth and Company will be able to pass on all wage hikes to clients. Wage hikes will be also positive for the workers
- Compliance burden goes down materially from multiple registrations to single registration
yesterday’s conference call updates…anyone attended the call…pls share
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There was all very positive comments on the call. Due to formalisation, SIS india security revenue which is 600cr per month can have headroom up to 6000cr
But very interesting was that according to the code, there’s a rule which requires principal employer to pay to contractor (SIS) within 7 days before SIS pays salary to contract labor. Currently it is the other way round where SIS pays contractor before collecting from employer. This can massively release working capital. Currently receivables for SIS is 70 days and can come down a lot (theoretically to 7 days) if client agrees. SIS will go back to clients to negotiate this aspect. Returns can go above 30% with release of working capital.
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Q3 FY26 Concall Notes:
- One time impact of Rs 290 Cr taken as prudent measure, its a conservative accounting treatment. As and when customers pay for Soc Sec , these charges will be reversed.
My observation - Others (e.g. Quess) should have taken the same approach, but they did not.
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Market Size of indian Securities market is 1 Lakh Cr. 40% of it is organized. Recent Labour reforms will trigger shift from unonganized to organized. Developed nations like Australia has 80% Security market consolidated.
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SIS hold 5% of total securities market. Tops 10 securities players hold around 15% market share and top 50 hold around 25% market share. So the industry is highly fragmented.
Recent Labour reforms will trigger reduction in compliance arbitrage and increase the addressable market for organized players. Overall Regulatory tailwind is with the company, it is to be seen how much will SIS be able to benefit from it going forward.
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5% EBITDA Margin and 12 to 15% growth rate is sustainable. India business is high margin and growing compared to international, so EBITDA margin should expand going forward.
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“SIS Story” book may be a good resource to know the company better.
Disclosure - Hold Tracking Position.
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