This a simple business but SIS is king in what it is doing but is Rs 815 a fair value let us analysis this
In 2008, R K Sinha his firm acquired an Australian security agency called Chubb Security, which was up for sale for $300 million. Also majority stake in Dusters Total Solutions, a Bengaluru-based facility management services provider. It paid Rs 350 crore for a 75% stake in Dusters. Over years they have acquired quality assets and business making them market leader in Security business in India and overseas.
According to a Frost & Sullivan report, demand for security and facility management services has witnessed exponential growth over the past decade. The industry is expected to grow over 20% year on year between 2015 and 2020.
So we know it has good business model and the industry is also going rapidly as the say crime helps society not sure about the society but it has help BJP Rajya Sabha member for BJP from bihar very rich and power. He is very close to present heads of BJP government given is liberal support both financial and manpower in BJP election fight in 2014.
SO the biggest question is this company 6000 crs MC with 90 Crs net profit is it worth investing even it will grow 20% it will take it five years to double it bottom line from 90 Crs to 180 Crs even with 180 Crs it will still have PE of 34 which is expensive in my cash flow even with 20% growth for next 5 years and 16% plus in next five years i still find it expensive.
So yes it growth company yes it has good business model yes it has international brands yes it has political connection but the price of Rs815 IMO is fully price So i will AVOID THIS IPO
IMO THIS COMPANY SHOULD NOT HAVE A MC OF 4000 CRS AT THE IPO PRICE SHOULD HAVE BEEN NOT MORE 700 I WOULD BE HAVE BEEN A BUMPER ISSUE IF IT HAD A PRICE BAND OF 555.....
COMPARING QUESS WITH SIS IS LIKE COMPARING WHITE COLLAR JOB WITH A BLUE COLLAR JOB
Initial Cash Flow: Rs 90,00,00,000.00
Years: 1-5 6-10
Growth Rate: 20% 15%
Terminal Growth Rate: 5% Discount Rate: 10%
Shares Outstanding: 7,31,47,749 Margin of Safety: 25%
Debt Level:
Year Flows Growth Value
1 1,08,00,00,000 20% Rs 98,18,18,181.82
2 1,29,60,00,000 20% Rs 1,07,10,74,380.17
3 1,55,52,00,000 20% Rs 1,16,84,44,778.36
4 1,86,62,40,000 20% Rs 1,27,46,67,030.94
5 2,23,94,88,000 20% Rs 1,39,05,45,851.94
6 2,66,49,90,720 19% Rs 1,50,43,17,785.28
7 3,14,46,89,050 18% Rs 1,61,37,22,715.11
8 3,67,92,86,188 17% Rs 1,71,64,14,160.62
9 4,26,79,71,978 16% Rs 1,81,00,36,751.20
10 4,90,81,67,775 15% Rs 1,89,23,11,148.98
Terminal Year Rs 5,15,35,76,163.58
PV of Year 1-10 Cash Flows: Rs 14,42,33,52,784.41
Terminal Value: Rs 39,73,85,34,128.62
Total PV of Cash Flows: Rs 54,16,18,86,913.03
Number of Shares: 7,31,47,749
Intrinsic Value (IV): Rs 740.45
Margin of Safety IV: Rs 555.33
What Percentage of IV comes from 73%
the Terminal Value:
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