SiS IPO review (Subscribe)

Review By Dilip Davda on Jul 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.

SiS IPO review

Conclusion / Investment Strategy

Being the first mover in three growing segments (of security services, cash logistics and facility management under one roof and registering 2.5 to 3% growth on month on month basis) issue is likely to generate fancy going forward. Investment may be considered for short to long term.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Jul 25, 2017

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at its own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

SiS IPO FAQs

  1. 1. Why SiS IPO?

    The initial public offer (IPO) of Security and Intelligence Services (India) Ltd offers an early investment opportunity in Security and Intelligence Services (India) Ltd. A stock market investor can buy SiS IPO shares by applying in IPO before Security and Intelligence Services (India) Ltd shares get listed at the stock exchanges. An investor could invest in SiS IPO for short term listing gain or a long term.

  2. 2. How is SiS IPO?

    Read the SiS IPO recommendations by the leading analyst and leading stock brokers.

    • Ajcon Global Services Ltd - Subscribe
    • Angel Broking - Subscribe
    • Dilip Davda - Subscribe
    • GEPL Capital Ltd - Subscribe
    • Motilal Oswal - Subscribe
    • S P Tulsian - Avoid
  3. 3. SiS IPO what should investors do?

    SiS IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the SiS IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is SiS IPO good?

    Our recommendation for SiS IPO is to subscribe.

  5. 5. Is SiS IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the SiS IPO.

  6. 6. When will SiS IPO allotment status?

    The SiS IPO allotment status will be available on or around Aug 7, 2017. The allotted shares will be credited in demat account by Aug 9, 2017. Visit SiS IPO allotment status to check.

  7. 7. When will SiS IPO list?

    The SiS IPO will list on Thursday, August 10, 2017, at BSE, NSE.

1 Comments

Bhavesh Patel
1. Bhavesh Patel  Jul 26, 2017 20:22
Hello!! I just want to know that how is SIS IPO? can I Invest my money in this? please reply....
MUDIT RASTOGI
1.1. MUDIT RASTOGI  Jul 30, 2017 10:58
Hi Bhavesh,

I think Business Fundamentals are strong considering leadership position, Revenue CAGR, Pan India presence, Diversity of Customer Base.

At the same time price band is high considering nearest listed peer Quest Corp PE and MPS of 93 & 886

My conclusion it seems okay types not worth taking much risk.

Disclaimer - This is my personal view








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