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Motilal Oswal Report
With the liberalisation and formalisation of labor markets and laws, SIS Ltd. should be among the biggest direct beneficiaries. The company has managed to gain market share during the pandemic and the trend is expected to continue.
We value SIS using SOTP:
Discounted cash flow for the India security business (Rs 355),
an enterprise value/Ebitda multiple of eight times (Rs 112) for the international security business (in line with global peers), and
DCF for the facility management business (Rs 117) less net debt (Rs 67).
Consequently, we arrive at our target price of Rs 520. We reiterate our 'Buy' rating on the stock.
Our target price implies a target price/earning multiple of 13 times FY25E earnings per share.
We view this as reasonable, given its strong growth profile and resilience to macroeconomic shocks.
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