February , 2020
Stock Scan - Security & Intelligence Services India Ltd
17:21 pm

Rajesh Agarwal

Company Background

Security & Intelligence Services India Ltd (SISL) was incorporated in 1985 and is presently a market leader in Security Services Company in India and Australia with leadership position in Facility Management & Cash Logistics Solutions.  SISL ranks amongst the top 10 Security and Facility management companies worldwide. SISL is the flagship company of the SIS Group and is promoted by R. K. Sinha and Rituraj Sinha. The company has expanded its footprint in not just across 29 Indian states, but also across a widespread network in Australia, New Zealand and Singapore (top 3 player in both) with a dynamic and multifaceted portfolio of services.

Investment Rationale

l SISL operates mainly into four segment areas - Security Services – India, Security Services – International, Facility management and Cash Logistics services. It also provides Electronic Security Solutions, Alarm Monitoring & Response and Pest Control services as a part of its various business verticals.

Wingdings Security Services-India: Solutions combine electronic security with trained workforce (a blend of physical and technology-based services) comprising its unique ‘Man-Tech’ solutions.

l The India Security Solutions business comprises five entities - its flagship SIS security business, SLV, Uniq, Tech SIS and Vprotect.

l It operates across 170 branches and has 1,57,922 employees with Rs. 304 crore monthly run rate in December 2019.

l In Q3FY20 its revenue grew by 26% YoY to Rs. 909 crore driven largely by better client retention and strong new client addition. The revenues per branch per month, increased from Rs. 1.45 crore in Q3FY19 to Rs. 1.79 crore in Q3FY20.

l Security Services – International: It comprises four entities - MSS and SXP in Australia, Henderson in Singapore, Platform4Group in New Zealand.

l It has over 9,200 employees with marquee clients like BHP Billiton, Reserve Bank of Australia and Federal Courts.

l In Q3FY20 its total revenue grew by 9% YoY to `940 crore coupled with strong EBIDTA aided by higher collections.

l Facility Management Solutions: It provides housekeeping services, janitorial support, integrated Facility Management, HVAC maintenance and pest control.

l This business comprises of DTSS, SMC, Rare Hospitality and TerminixSIS.

l The business currently operates across 77 branches and has close to 64,000 employees.

l SIS currently serves over 300 hospitals across the group.

l It posted 33% YoY growth to Rs. 333 crore in Q3FY20 due to higher growth in verticals like Hospitality, Railways and Healthcare.

l Cash Logistics Solutions: It provide secured cash in transit, including transportation of bank notes and other valuables, doorstep banking as well as cash processing, ATM-related services, including ATM replenishment, first-line maintenance and safekeeping, and vault-related services for bullion and cash.

l It has 49% holding in the JV with Prosegurof Spain, a world leader in cash solutions.

l It operates over 2000 cash vans and 59 vaults covering over 300 cities across India.

l In Q3FY20 its revenue was Rs. 86 crore, a 17% increase from Q3 of FY19.

l On consolidated basis in Q3FY20 & 9MFY20 its revenue grew by 19% & 22% YoY to Rs. 2,178 crore & Rs. 6,275 crore respectively. Its EBITDA registered a strong increase by 36% YoYin Q3FY20. SISL ended Q3FY20 with a monthly run rate of Rs. 727 crore. It crossed USD 100Mn per month revenue milestone in December 2019 while maintaining a 23% ROE despite a large hit on account of non-cash items in interest and amortisation due to PPA treatment for acquisitions. Its leverage levels lowered to 1.2x Net Debt/ EBITDA on solid cash generation with an average cost of capital of 7.5% in Q3FY20.


SISL’s robust and diversified business structure, improved its market share through acquisitions, superior technology driven process, strong presence and most preferred in major events puts it on high growth trajectory. Further rising urbanization, increasing demand for protection as well as a jump in new infrastructure development would boost demand for private security services and helps SIS to attain higher growth momentum. At the CMP of Rs. 579.75, the stock trades at 11 times FY21 EPS of Rs. 52. Hence, we recommend a BUY on the stock with a Target Price of Rs. 676 with an upside potential of 17% from the current level with an investment horizon of 9-12.


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