iifl-logo-icon 1
IIFL

Invest wise with Expert advice

By continuing, I accept the T&C and agree to receive communication on Whatsapp

  • Open Demat with exclusive Advice & Services
  • Get a dedicated Relationship Manager to help you grow your wealth
  • Exclusive advisory on 20+ trading & wealth-based investment options
  • One tap Investments, Automated trading & much more
  • Minimum 1 lakh margin required
sidebar image

SIS: Focus on improving domestic margins

21 Apr 2023 , 10:59 AM

Recommendation: Buy

Target Price: Rs 500

While the company is confident of increasing margins of the FM business by ~150 basis points over FY24 and FY25 (mainly through cost rationalization), the Security businesses (India + Oversees) will focus on augmenting the mix of tech-enabled solutions offering. Cash Logistics business has recovered strongly post the difficult COVID years. Analysts at IIFL Securities have cut their FY24/25 EPS estimates by 4-5% and their Target Price to Rs 500.

Significant margin improvements in FM

Management guided to improving margins of the FM business by ~75 basis points each in FY24 and FY25. This will largely be driven by the planned reduction in SG&A costs and conversion of certain low-margin “fixed fee contracts” to “percentage contracts”. Management stated that the FM business is on track to becoming the market leader by the end of FY23; it is confident of cementing this position in the coming years. The Pan-India presence of the business is one of its biggest competitive edges.

Security Solutions (India) to focus on improving contract mix

The business is concentrating on increasing share of the higher margin tech-enabled solutions offering (versus traditional physical guarding). SIS has consistently made investments into technology, to stay ahead of the competition, and has increasingly started to monetize this investment. VProtect is the fastest growing alarm monitoring company in India and offers an optimum solution that is a mix of physical guarding and CCTV solutions. Its customer site count has grown at a CAGR of ~74% over the last three years.

Margins of International business to normalize

Margins are expected to normalize to ~4-4.5% in future, as the high-margin onetime contracts cool off in FY24. Going forward, the segment shall focus on increasing the patrolling and monitoring service offering with the current customers. While supply-side challenges have eased to an extent, they continue to remain a headwind (especially in Henderson).

 

Related Tags

  • sis
sidebar mobile

BLOGS AND PERSONAL FINANCE

Read More
Knowledge Centerplus
Logo

Logo IIFL Customer Care Number
(Gold/NCD/NBFC/Insurance/NPS)
1860-267-3000 / 7039-050-000

Logo IIFL Securities Support WhatsApp Number
+91 9892691696

Download The App Now

appapp
Knowledge Centerplus

Follow us on

facebooktwitterrssyoutubeinstagramlinkedin

2024, IIFL Securities Ltd. All Rights Reserved

ATTENTION INVESTORS
  • Prevent Unauthorized Transactions in your demat / trading account Update your Mobile Number/ email Id with your stock broker / Depository Participant. Receive information of your transactions directly from Exchanges on your mobile / email at the end of day and alerts on your registered mobile for all debits and other important transactions in your demat account directly from NSDL/ CDSL on the same day." - Issued in the interest of investors.
  • KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
  • No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account."

www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.

RISK DISCLOSURE ON DERIVATIVES
  • 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
  • On an average, loss makers registered net trading loss close to Rs. 50,000.
  • Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
  • Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.
Copyright © IIFL Securities Ltd. All rights Reserved.

Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248

plus
We are ISO 27001:2013 Certified.

This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.