- India security business is shaping up well since June'21 with the opening of the economy
- Australia business: Expected to normalise going ahead as hotel quarantine work will taper off with higher demand from retail and aviation sectors.
- International business has been generating strong cash flow from operation and has provided stability to the overall financial performance e during the Pandemic.
- Recently got few electronic security contracts from select blue chip clients. Such contracts generate higher absolute margin and require less manpower and is a welcome tailwind. But, is expected to pickup slowly in India and may reach around 20% of security revenue over next 5 years.
- Currently, the focus is on growing India security market share ( ~5%), primarily through organic process. Don't want to do anything that can pull down RoE from current 22%.
- Overall EBITDA margin expected to touch 6.5% over next 4-5 years.
- Leverage is in comfortable range as current Net Debt/ EBITDA is at 1.15x, close to target range of 1x. Not big cash outflow expected over next 3 quarters.
- As growth picks up in India business, cash holding with the company will come handy to fund working capital needs.
- The performance of Henderson is expected to pick up over 6 months with new management taking over.
- DSO to touch to 40-45 days going ahead as operation normalises.
- Overall, strong commentary and reinforces our view about the outlook of the company. We have BUY on the stock with DCF based target price of Rs 580.
Shares of Security and Intelligence Services (India) Ltd was last trading in BSE at Rs. 485 as compared to the previous close of Rs. 481.7. The total number of shares traded during the day was 24886 in over 1490 trades.
The stock hit an intraday high of Rs. 494.95 and intraday low of 480. The net turnover during the day was Rs. 12144046.