SIS Ltd, the country’s largest security services player, is expecting its facility management vertical to recover to pre-Covid levels on the back of normalization in services across clusters like malls, Railways and re-opening of offices, including IT company employees coming back-to-work. The security services segment – its prime vertical – has seen a good uptick June onwards.
The company reported consolidated revenue of ₹2,379 crore in Q1FY22, a near 10 per cent y-o-y growth; while sequentially it fell 2.7 per cent. While all verticals reported higher revenue in June over April and May, thereby signifying the start of business recovery; SIS Ltd’s net debt shot-up to ₹516 crore in April – June (₹353 crore in March quarter ending) with debt to EBITDA levels increasing to 1.15 per cent (up from 0.72 per cent). “We have had significant cash outflows (of ₹301 crore) which include purchase of stakes in Henderson and Uniq at ₹177 crore and a buyback (of shares) at ₹124 crore. But even at 1.15 per cent the Net Debt/ EBITDA is at comfortable levels,” Rituraj Sinha, Group Managing Director, SIS Ltd has said.
The company’s facility management business saw a “strong recovery” q-o-q (4 percent plus growth), but is expecting it to rebound at pre-Covid levels’, as vaccination picks up and large offices open up. “Facility management is coming back each quarter with hotels opening up. But the majority of our clients like railways or schools are still operating at a fraction of their capacity or remain closed,” he added.
While volume and revenues dipped “slightly” in the security services businesses in April and May owing to the severity of the second wave, pickup towards ‘end-of-the-quarter’ saw revenues in June stand at ₹295 crore. In April and May the cumulative revenue was at ₹586 crore. “Business in the coming two to three quarters should be fine, if not better,” Sinha said, adding that EBITDA is marginally higher at 5 per cent in Q1FY22 (against 4.9 per cent in Q4FY21).
“With revenues inching up and reduced Covid expenditure, margins will see an uptick. During Q1, SIS managed to get new orders worth ₹15 crore indicating a steady normalisation. These wins have been across segments and geographies,” he said.
International business
International businesses reported revenue of ₹1,201 crore in Q1FY22, a 4.2 per cent drop sequentially; a near 18 per cent rise, y-o-y. The business, after cushioning off the effects of the impact of the pandemic on India operations, is now “getting back to normal levels”.
The international business (security solutions) is slowly “tapering off” and it was countered “to some extent” by recovery in aviation and other segments.
Tender activity in Australia is slowly picking-up, but wage escalation and pass through will be in focus over the coming quarters there. “The temporary Covid contracts came in at a much higher margin than normal, which are now being normalised. Some of the cost improvement measures on travel and other overheads continue to assist in margin support during the turbulent times,” he added.
