Security and Intelligence Services (SIS) IPO: Brokerage views & Run up to IPO

This post on Security and Intelligence Services IPO (SIS IPO)  brings out consolidated brokerage views opinions, IPO Review / Analysis, Note/ reports and recommendation of brokerages , Analyst, Business New papers, Management views, information on Anchor investors, Subscription etc. This info on Security and Intelligence IPO and shall be updated continuously till the closure of the issue. The information collated from various sources and reports in public domain can help investors to decide whether they should subscribe to Security and Intelligence Services IPO (SIS IPO) or not.

Related Posts: Security and Intelligence Services IPO (SIS IPO): Review
SIS IPO: Allotment Status can be checked here
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SIS IPO: Grey Market Premium etc.
07/08/17  Grey Market Premium Rs.80
01/08/17  Grey Market Premium Rs. 70
31/07/17  Grey Market Premium Rs. 55 (Deals Happening)

30/07/17 Grey Market Premium Rs. 50-60,  Kostak (Application rate) –  Rs. 200-300 (Low activity)

Subscription:  Security and Intelligence Services IPO (SIS IPO)  ( x times)
  QIB NII Retail Total
Day 3 5.64  1.66 19.51  7.07
Day 2  1.12  0.02 7.14 1.93
Day 1  0.0  0.01 2.06 0.38

SIS IPO: Complete Anchor List 

Security and Intelligence Services (SIS) has alloted 43,04,432 shares to 18 anchor investors at Rs 815 per share aggregating to Rs350.81 crore. The anchor investors include Abu Dhabi Investment Authority-Behave, Reliance Capital Trustee Co. Ltd A/C Reliance Tax Saver (Elss) Fund, Birla Sun Life Trustee Co. Pvt Ltd A/C Birla Sun Life Small & Midcap Fund, Amundi Funds Equity India and Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd.

Complete Security and Intelligence Services IPO (SIS IPO) Anchor List

Consolidated opinion of Brokerages, Analysts, Business New Paper Reports, Management Views on Security and Intelligence Services IPO (SIS IPO)

SP Tulsiyan Website: Quess Corp’s higher multiples are justified by its stunning historic growth rates (thanks to successful acquisitions), healthy margins and high profitability. SIS issue fades in comparison without leaving much on the table, in terms of valuation. While the business is scalable, wafer-thin margins, cut throat competition and unattractive pricing make this issue an avoid, based on fundamentals. “

Ajcon Global: “Subscribe: The valuation at 65 times FY17 EPS is not equivalent to no immediate peers as such in the listed space. Considering the similar nature of services to Quess Corp, the latter’s valuation is at 96 times FY17 EPS. A combination of factors such as diverse portfolio, and presence in India and Australia, among others, the company will see a significant growth of over 50 percent CAGR in profit over the next two years. Further, investment of DE Shaw and CX Partners instills confidence on corporate governance.”

Angel Broking: “At the upper price band of `815, issue is offered at 61x FY17EPS (Pre issue marketcap), which is at ~36% discount to Quess Corp (96x FY2017EPS). Moreover, SIS has better ROE (16.4%) compared to Quess Corp (13.6%). Furthermore, at 10.3xP/BV, 26.2xEV/EBITDA, SIS’s valuation looks attractive compared to Quess Corp’s valuation of 13.1xP/BV, 50.4xEV/EBITDA. Hence, we recommend SUBSCRIBE rating on the issue. “

Capital Market Magazine: “Score 42/100” 

SSJ Finance:”SIS (India) Ltd has reported a CAGR of 14.6% and 12.4% on the sales and net profit fronts respectively over FY2013-2016. On its upper band of price of Rs 815,  the issue is priced at P/E ratio of 61.3x of its FY2017 EPS of Rs 13.3. We believe  that the IPO is fairly priced but since company has a unique business model we recommend to Subscribe for listing gains.”

India Infoline: “Widespread branch network enables the company to service a largenumber of customer premises and render customized services across India
and Australia. The company is likely to enjoy the benefits of having the first mover advantage in security services, cash logistics and facility management services. The future of its business areas looks promising given healthy outlook of the Indian economy. However, at the upper price band of Rs. 815, the stock is priced at 65x of FY17 earnings.”

Choice Broking:  “With the robust return ratio i.e. RoE and RoCE over 15% over the last five fiscals and strong growth industry drivers, there is a high visibility of business. SIS operates in security services, cash logistics and facility management, there are no close listed peer, however there are two listed companies namely Quess Corp. Ltd. and Teamlease Services which deal in staffing and human resources business. At the upper price band of Rs815 per share, the issue is demanding a P/E multiple of 65.3 (FY17 EPS post issue) Based on our quick estimate, we arrive at an FY18E EPS of Rs19.1, which translated into an one year forward P/E multiple of 42.6(x), as compared to Quess Corp at 60.3(x) and Teamlease at 29.9(x) indicating that the issue is fully valued leaving very limited space for further upside. Thus considering all these parameter we are assigning ‘Subscribe with caution’ rating to the issue.

Ashika Direct: “The issue has been offered in a price band of Rs 805-815 per equity share. The aggregate size of the offer is around Rs 774.46 crore to Rs 784.08 crore based on lower and upper price band respectively. Minimum application is to be made for 18 shares and in multiples thereon, thereafter. The effective P/E based on the ask price at lower band comes to 212.40 and at upper price band comes at 215.04 based on FY17 EPS of 3.79. The company is into diverse business segment and there is no listed company which is exclusively engaged in a portfolio of businesses similar to it. On performance front, the company on a standalone basis posted a PAT of Rs 33.57 crore on a revenue of Rs 1287.32 crore for the year ended March 31,2016, PAT of Rs 24.64 crore on revenue of Rs 1056.29 crore for FY 15 and PAT of Rs 33.21 crore on revenue of Rs 824.49 crore for FY 14. For FY 17 the company has reported PAT of Rs 26.55 crore on revenue of Rs 1614.76 crore. The company will be using the issue proceed for repayment and pre-payment of a portion of certain outstanding indebtedness. The company has diverse portfolio of services and is having a widespread branch network consisting of 251 branches in 124 cities and towns in India. It is the second largest security services provider in India, in terms of revenue and its brands are well-recognized for providing quality security services in India and Australia. It is also the second largest cash logistics service provider in India in terms of market share. The company is well placed to capitalize on the expected growth in the private security and facility management services industry and while it is continuing to maintain organic growth momentum, it is exploring inorganic expansion as well, offering a good scope of growth and strong play for long term prospect..”

Motilal Oswal. :“Subscribe: Strong asset turnover ratio leading to high RoCEs; Company reported fixed asset turnovers of 10+ over the past three years coupled with working capital of about 30 days implying a very asset-light business model which has resulted in a core RoCEs (excluding cash on books) of 22% in FY17. “

SMC : “Rating 3/5 Considering the P/E valuation on the upper end of the price band of Rs. 815, the stock is priced at pre issue P/E of 61.35x on its FY17 EPS of Rs. 13.28 Post issue, the stock is priced at a P/E of 65.32x on its EPS of Rs. 12.48. Looking at the P/B ratio at Rs. 815 the stock is priced at P/B ratio of 10.31x on
the pre issue book value of Rs.79.04 and on the post issue book value of Rs. 123.75 the P/B comes out to 6.59x. The company is the second largest in security service, cash logistics and fourth largest in facility management segments and the fastest growing company in India. India is providing huge potential for speedy growth across the segments for this company. An investor may opt the issue for long term”

Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk. 

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