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Strong growth and recovery in margin to drive earnings 

At its Investor Day 2023, the management of SECIS remained bullish on the company’s business outlook given strong growth opportunities ahead. It believes that this is a ‘Golden era’ for this business in India owing to large infra spending and wage revisions. The management was confident about reverting to pre-Covid level margins in the near term and suggested that in the long term, margins will be driven by automation and tech-based solutions.

Growth to remain strong; multiple opportunities ahead

* SECIS management believes that India is in the best phase for the company’s business to grow, aided by the government’s thrust for strong infra capex and a massive wage correction wave over the next few years. These factors will ensure growth in both volume and pricing. ? Key growth drivers for SECIS include growth in minimum wage, rapid urbanization, increased cross-selling, and opportunities in new sectors.

* The management sees strong opportunities in sectors like data centers and residential & commercial real estate. 

Strong outlook across businesses

* Security solutions India – Strong growth is expected to continue in this vertical, driven by an enhanced focus on solutions and e-surveillance. SECIS is on track to become the largest e-surveillance company in India with an order book of over 22k sites. The management sees a lot of opportunity in the B2C space. The current run rate for the Vprotect business is ~INR1.5b, which can scale up to INR5b in the near term. ? Security solutions international – This vertical will continue to grow in single digits while providing a natural hedge to the India business. Henderson has a clear path to profitability with a more evident turnaround. The contribution of this business to overall revenues will continue to decline to reach sub-30% in coming years

* Facility management – The management sees strong opportunities ahead given a strong infrastructure spending wave. On pure-play basis, SECIS has the largest facility management business in India and is ~30% bigger than G4S. The management is confident of widening the gap with the second largest peer over the next few years. The near-term growth rate would be slower as it will focus on margins.

* Cash logistics – The company has successfully moved away from the declining ATM business to a bank outsourcing business. SECIS has the second largest cash management business in India with a strong margin profile of ~15%. The focus remains on route density, reduction in insurance costs and increase in tariffs to enhance profitability. 

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SEBI Registration number is INH000000412