Fundamental Analysis
SECURITY AND INTELLIGENCE SERVICES (INDIA) LTD
{Ticker : 540673 { BUY: Rs. 357.30 { Target: Rs. 400
Security and Intelligence Services (SIS) is a company which provides security and business support services. It offers solution across various service lines, including security services, cash logistics services, electronic security solution and alarm monitoring & response and facility management services, such as facility management & housekeeping as well as pest control.
On a consolidated quarterly front, net sales for the quarter- ended December 2019 was reported at Rs 2,178.2 crore, up by 18.6 per cent from Rs 1,836.8 crore in the quarter ended December 2018. The company reported an operating profit of Rs 81.8 crore in Q3FY20, up by 23.3 per cent from Rs 66.4 crore reported in the corresponding period for the previous fiscal year. The company reported a net profit of Rs 78.3 crore in Q3FY20 and Rs 59.1 crore in Q3FY19, registering a YoY growth of 32.5 per cent.
On the annual front, the company reported net sales of Rs 7,093.27 crore in Q3FY20, increasing by 21.60 per cent from Rs 5,833.37 crore in FY19. The company reported an operating profit of Rs 209.52 crore in FY19, increasing by 11.79 per cent from Rs 187.43 crore reported in FY18. Net profit saw a growth of 31.68 per cent in FY19 to Rs 214.67 crore, from Rs 163.02 crore in the previous fiscal year.
The security services in India is currently witnessing a high growth rate due to the increasing concerns about crime and terrorism, inadequate safety measures and growing industrial zones. It is further expected to grow higher compared to its current rate of 20 per cent, owing to technological advancement and higher penetration of foreign players through FDI.
Healthy client acquisitions and increasing growth in the key business verticals are likely to put SIS on a high growth trajectory. Moreover, given the healthy contributions of its recent acquisitions, SLV and Uniq businesses to the total revenue, the company has a definitive inorganic strategy to attain higher growth and increase its market share as well. Owing to these reasons, we recommend a BUY.