Security services provider SIS Ltd says orders are back in the April to June quarter, after a lull in the previous three-month period due to the emergence of the Omicron variant of the SARS-Cov-2 virus.
Rituraj Sinha, Group Managing Director, SIS Ltd, said that new orders — including renewals — are normally placed in the January to March period, but there was a slowdown this year due to the rising number of Omicron cases. However, from March the orders resumed, indicating recovery and renewed business confidence.
“There was some impact of Omicron from January to March, which led to a delay in contract renewals and new orders. But towards the end of the quarter, as well as in Q1FY23, numbers began picking up. So, whatever decision-making was delayed is now coming back in,” he told BusinessLine.
The revenue run rate in March 2022 was ₹942.4 crore, compared to ₹719.7 crore in March 2020 (pre-Covid).
SIS Ltd reported a revenue of ₹10,059 crore in FY22, up 10 per cent year-on-year, and profit after tax of ₹326 crore, down 11 per cent y-o-y.
Apart from security services, SIS Ltd offers facility management and cash logistics services.
Return to growth
According to Sinha, “growth (is) clearly back” across all segments — security, cash logistics and facility management — while in the international markets there is a “clear uptick in tender activity”.
“There is a mix of activity around the new orders/ tenders/ RFPs [request for proposal] and so on. But Covid did lead to a lot of volume contraction across segments like the IT sector, hotels and specific sub-sectors too. They are coming back to full operationalisation now and that is leading to a lot of volume recovery as well,” he added.
For SIS, the focus continues to be “organic growth”, with mergers and acquisitions considered “for strategic reasons like increasing market share in key pockets or to acquire key service”. It aimsto double its market share in the security and facility management business in India over the next few years.
According to a Yes Securities report, the company’s growth will be fuelled by a rising demand for security and facility management services in India and the shift of market share from unorganised to organised players. Vendor consolidation would benefit large players such as SIS. “Recovery in security and facilities management business in India provides strong growth visibility,” it said.
The company is also expecting a Covid-19-related tapering of its international business.
According to Sinha, the businesss is unlikely to deliver a 20 per cent y-o-y growth “in an economy that does not grow more than 3-4 per cent at best”. Earlier there was a lot of temporary work — which was priced differently, leading to a higher margin call. In FY22, there is normalisation and “growth is in single digits and the EBITDA margin is now tracking more towards 5 per cent”.
He prefers to compare with the FY20 numbers. “We believe that the international business will ultimately revert back to the FY20 pre-Covid (level) and mostly it should happen over the course of this fiscal,” he said.