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Review By Dilip Davda on July 25, 2017

Security and Intelligence Services (India) Ltd (SiS) is a leading provider of private security and facility management services in India. It is the second largest in security service, cash logistics and fourth largest in facility management segments and the fastest growing company in India. It also commands first position in securities services in Australia. Its services portfolio includes Security Services, Cash Logistics Services, Electronic Security Services, and Facility Management Services etc. SiS has entered into strategic relationships in India with several multinational companies. As of April 30, 2017, the company had a widespread branch network consisting of 251 branches in 124 cities and towns in India, which cover 630 districts. It employed 154432 personnel in India and rendered security and facility management services at 11,869 customer premises across India. In Australia, SiS operates in each of the eight states and employed 5,754 personnel servicing 245 customers, as of April 30, 2017. Widespread branch network enables the company to service a large number of customer premises and render customized services across India and Australia. The company has set up an extensive employee platform which spans recruitment, customized training and development, deployment, incentivization and management of personnel. With its deep geographical reach for manpower sourcing and training and currently operate 18 training academies across India and four training academies across Australia. The company provides company specific and site specific training to its personnel. SiS derives benefits from a pipeline of operational managers from the graduate trainee officer program undertaken at its training academy at Garhwa, Jharkhand, which is focused on developing a management cadre with in-depth knowledge of company's business and operations. SiS is the second largest cash logistics service provider in India.

To part finance its repayment-prepayment of certain outstanding debts, working capital and general corpus fund needs, the company is coming out with a maiden IPO of approx. 9565404 equity shares of Rs. 10 each via book building route in a price band of Rs. 805-815. Issue consists of offer for sale of 5120619 shares and issue of approx 4444785 fresh equity shares (at the upper price band). The company plans to mobilize Rs. 774.46 to Rs. 779.58 crore based on lower and upper price band. Issue opens for subscription on 31.07.17 and will close on 02.08.17. Minimum application is to be made for 18 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. BRLMs to this issue are Axis Capital Ltd, ICICI Securities Ltd, IIFL Holdings Ltd, Kotak Mahindra Capital Co. Ltd, SBI Capital Markets Ltd, Yes Securities (India) Ltd; IDBI Capital Markets & Securities Ltd. Link Intime India Pvt Ltd is the registrar to the issue. Under this issue, company has reserved 75% for QIBs, 15% for HNIs and 10% for retail in accordance with Regulation 26(2) of SEBI.

From signing of MoA till March 2006 it issued equity at par including a bonus issue in the ratio of 1 for 1 in October 2005. Thereafter it also issued fresh equity in a price range of Rs. 197.15 to Rs. 829.83 between July 2007 and April 2013. It converted CCPS at par during all these years till June 2017. It also issued bonus in the ratio of 10 for 1 in September 2016. Post issue, its current paid up equity capital of Rs. 68.71 crore will stand enhanced to Rs. 73.15 crore.

On performance front, the company has (on a consolidated basis) reported total revenue/net profits of Rs. 3107.68 cr. / Rs. 65.43 cr. (FY14), Rs. 3565.15 cr. / Rs. 48.48 cr. (FY15), Rs. 3850.12 cr. / Rs. 64.57 cr. (FY16) and Rs. 4577.12 cr. / Rs. 90.54 cr. (FY17). It suffered a setback in FY 15 on account higher provisioning of depreciation, finance cost and employees benefits. Last three year's average EPS is Rs. 11.75 and for FY17 it is Rs. 13.03. Last three fiscal's average RoNW is 16.65%. For last five fiscals, it has reported CAGR of 14.6% in revenues, 4.5% in EBITDA margins and 25% plus for RoACE. India is providing huge potential for speedy growth across the segments for this company. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of 65 plus that augurs well against its nearest peer Quess Corp (although it is not in all the segments like SiS) trading at a P/E of 95 plus. Issue is priced at a P/BV of 10.31.

The GCBRLMs and BRLMs associated with the offer have handled 54 public issues in the past three years, of which 15 issues closed below the offer price on the listing date.

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