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Motilal Oswal Report
SIS Ltd. reported an in-line performance with revenue up 13.1% YoY and its Ebida margin standing at 4.5%. Profit after tax was higher at Rs 931 million, owing to higher ‘other income' and the benefit on income taxes under section 80JJAA.
SIS delivered healthy growth in Q4 FY23 despite weak macro environment. The management commentary remained strong. Cross-selling opportunities in India Security and facility management business, increase in minimum wages, and longerterm tailwinds from sector consolidation are expected to help SIS deliver 15.4% revenue compound annual growth rate (our estimate:) over FY23-25.
SIS India business is expected to deliver a strong revenue CAGR of 20%/27% in the India Security/facility management business for FY23-25E. Conversely, its Australia business is expected to witness a modest 4% CAGR over the next two years.
Q4 FY23 margin were in line with our estimates. With stabilisation in selling, general and administrative costs and strong growth ahead, the management expects to return to a normalised margin of 6% in its India security and facility management businesses.
We expect overall margins at 4.9%/5.2% for FY24/FY25. SIS is expected to return to FY21-level margin in the medium term, backed by positive operating leverage in its India business and stable performance in its international business.
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