IGI Logo

Result Synopsis

SIS Ltd (SECIS) reported mixed financial performance for the quarter. The sequential revenue growth was slightly below estimates; while EBITDA margin was inline with expectation. It reported revenue growth of 11.1% YoY (down 0.6% QoQ), led by India security business (up 16.2% YoY, up 1.2% QoQ) and Facilities management business(up 21.3% YoY, up 3.0% QoQ) and International Security business (up 3.7% YoY, down 1.3% QoQ in cc terms). There was sequential improvement in EBITDA margin(up 18bps QoQ) led by improvement in EBITDA margin of India Security segment by 40 bps QoQ. Net debt increased by Rs1.2bn QoQ to Rs 9.8bn, on account of increase in working capital.

The growth of SIS will be fueled by rising penetration of security and facility management business in India and the shift of market share from unorganized to organized players. It has been gaining market share in Indian market growing at 1.5x the Industry growth rate. Also, the vendor consolidation would benefit large players such as SIS. The EBITDA margin profile should improve going ahead led by normalization of business environment. We estimate revenue CAGR of 14.9% over FY23?25E with average EBITDA margin of 5.2%. We maintain our BUY rating on the stock with unchanged target price of Rs 560/share based on DCF methodology. The stock trades at PER of 15.9x/11.6x on FY24E/FY25E EPS.

Result Highlights

* Reported revenue of Rs 29.8bn (up 11.1% YoY, down 0.6% QoQ), led by India security business (up 16.2% YoY, up 1.2% QoQ) and Facilities Management business (up 21.3% YoY, up 3.0% QoQ). International Security business decreased by 1.3% QoQ in cc terms (up 3.7% YoY).

* EBITDA margin improved by 18 bps QoQ to 4.7%. The improvement in EBITDA margin was due to efficiency measures in India Security Segment as its EBITDA margin improved by 40 bps QoQ.

* PAT for the quarter Q1FY24 was Rs. 895 mn which was down 3.9% q-o-q and up 8.4% on y-o-y basis. The decrease in PAT was due to lower tax credit and lower other income in the quarter.

* Net debt increased to Rs 9.8bn (vs Rs 8.6bn as Q4FY23), with increase in debt led by increase in working capital.

* Net debt/ EBITDA was 1.9x as of June 2023 vs 1.8x in March 2023.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://yesinvest.in/privacy_policy_disclaimers
SEBI Registration number is INZ000185632

Above views are of the author and not of the website kindly read disclaimer