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Prime beneficiary of new wage code norms

We recently interacted with the management of SECIS IN to gain insights into their growth strategy and outlook. SECIS IN is evolving into a structurally advantaged solutions-led platform, with management guiding sustained double-digit growth across core segments, supported by labour code-driven formalization, rising outsourcing, and increasing adoption of tech-enabled services. Security Solutions (India) and Facility Management (FM) businesses are expected to anchor core compounding with growth expectation of ~13-15% in near-to-medium term while Security Solutions (International) is positioned for steady ~7.5–8.0% growth with margins expected to improve to ~4.0–4.5% over the next 4–5 quarters. Implementation of wage code norms, improving contract mix, and increasing use of tech-enabled services is expected to drive growth and result in margin expansion reinforcing SECIS IN’s positioning as a scaled, compliant, and solutions-led leader. SECIS IN trades at a consensus P/E multiple of 14x/12x over FY27E/FY28E EPS. Not rated.

Market leader in providing security solutions in India:

As India’s largest security services provider, SECIS IN’s domestic business is anchored by a strong compliance-led moat managing ~2.49 lakh workforce at scale. The business offers high revenue visibility supported by long-tenure agreements (3–5 years), 85% renewal rates, and a diversified base of 14,000–15,000 contracts. Near-to-medium growth is pegged at ~13.0–15.0% driven by wage inflation pass-through and addition of clients. On the other hand, profitability profile is expected to improve to ~5.5–6.0% supported by exit of low-margin contracts, client mix improvement, and rising share of solution-led offerings.

Margin improvement on cards in Security Solutions (International):

In the international markets, SECIS IN has presence in 3 countries with 34 branches, 12,000+ customer sites, 8,000+ customers, and ~11,000 employees, highlighting strong operating infrastructure and client diversification. While top-line growth is expected to remain in the band of ~7.5-8% in near-term, margin profile is expected to register an improvement to ~4-4.5% over the next 4-5 quarters led by stabilization of operations at SXP, repricing of contracts, and improved client mix.

New labour code norms to benefit organized players like SECIS IN:

At its core, the labor code raises compliance threshold across the sector, through higher statutory wages, stricter gratuity provisioning, formalized leave accounting, and digitized unified filings (via platforms such as the Shram Suvidha Portal). These changes directly erode the historical cost arbitrage enjoyed by unorganized players primarily benefitting compliant operators like SECIS IN. Further, rising labor costs under the new framework alter the economics of manpower-heavy models, making technology-led, productivityenhancing solutions more attractive for clients where SECIS IN has strong presence. Overall, we believe new wage code norms act as structural tailwind for organized and compliant players like SECIS IN.

Market leader in providing security solutions in India:

SECIS IN is a market leader in providing security solutions in India. Some of the key offerings of the company include manned guarding, electronic surveillance, event security management, emergency response handling and remote monitoring services.

The competitive moat of business lies in the ability to manage large-scale distributed manpower (~2.49 lakh employees FY26) with full statutory compliance, supported by proprietary ERP, payroll systems, and training infrastructure, which remains difficult for the fragmented unorganized sector (70–80% of industry) to replicate.

SECIS IN enters into long term contracts (3-5 years) with 85% renewal rates (reflects customer stickiness) and a highly diversified client base (61,000 customer sites as of FY26) providing strong revenue visibility and minimizing concentration risk (14-15K contracts). SECIS IN earns a commission/fee of ~10-12% and any escalation in wages or statutory costs is typically pass-through in nature. The Security Solutions (India) business is expected to register a growth of ~13-15% in near to medium term driven by a combination of wage inflation pass-through and underlying volume expansion, supported by increasing outsourcing and formalization.

Importantly, the segment is evolving beyond a pure manpower model into a technology-enabled security platform, with ManTech (AI surveillance, IoT sensors etc) and VProtect services (alarm monitoring services) that can drive margins. As of FY26, Security Solutions (India) business reported an EBITDA margin of 5.1% and management has outlined a recovery roadmap to ~5.5–6.0% driven by exit of low-margin/fixed-price contracts, better client mix, and increasing share of tech-enabled integrated offerings.

Overall, the Security Solutions (India) business has inflation-linked characteristics (wage escalation is pass through in nature to clients) with future growth trajectory hinging on new contract wins. However, compliance (new wage code norms in place) and scale (market is fragmented) act as entry barriers ensuring SECIS IN’s leadership position is likely to remain intact

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