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Motilal Oswal Report
SIS Ltd. reported revenue growth of 5.8% YoY in Q3 FY24, lower than our estimate of 10.6% YoY due to a weakness in the facility management business (plus 2% YoY). Despite weak growth, the margin improved materially by 50 basis points YoY in Q3. The weakness in FM growth was due to the company's decision to move away from contracts that are low-margin and cost intensive.
However, the management is confident about a recovery in the FM segment, aided by quality contracts with multi-year commitments.
However, the India business is on a solid footing and should sustain its growth momentum going ahead. We expect the India business to clock a revenue compound annual growth rate of 20.5% over FY24-26.
Conversely, its Australia business is still under pressure and could post a modest 6.1% CAGR over FY24-26.
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