On Thursday, private security industry company SIS reported its highest-ever quarterly revenue, of Rs 2,767.7 crore for Q2FY23, at 13.9% year-on-year growth over Rs 2,430.9 crore it reported in Q2FY22, and 3.3% growth over Rs 2,678.2 crore in Q1FY23.
The EBITDA, however, dropped 10.8% to Rs 109.8 crore in Q2FY23, from Rs 123.1 crore in Q2FY22. Profit after taxes also saw a marginal decline of 1.4%—from Rs 68.4 crore in Q2FY22 to Rs 67.4 crore in Q2FY23.
SIS runs four verticals—India security solutions, international security solutions, facility management solutions, and cash logistics solutions.
“The India security business continued the growth momentum with 8.8% quarter-on-quarter and 21.7% year-on-year record organic growth in revenues and reached Rs 1,150 crore, which is the highest in our history and clearly indicates that growth is back in India,” Devesh Desai, CFO, SIS, told FE. “Major wins during the quarter came from oil & gas, healthcare and education segments. EBITDA margin for Q2FY23 improved to 4.4% from 4% in Q1FY23.”
The international business recorded revenues of Rs 1,161 crore, which is a 3.6% quarter-on-quarter decline and a 0.4% year-on-year increase over the same quarter in the previous year. “After adjusting for the impact of temporary high margin Covid-related contracts reducing to a minuscule level in Q2 and special events revenue in Q1, the business grew 3.6% in constant currency on a normalised basis,” Desai said. “EBITDA margins in international business security solutions witnessed a decline in Q2FY23, to 3.3%. This decline is a temporary phenomenon caused by a landmark wage increase in Australia. The closure of all Covid-related temporary high margin contracts also contributed to the decline in EBITDA margins during the quarter. The gap caused by these timing differences is expected to be eliminated by Q3FY23 and the full quarter effect will be visible in Q4FY23.”
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The facility management segment continued its strong recovery with a revenue growth of 10.1% over Q1FY23 and 40.1% over Q2FY22, reaching revenues of Rs 471 crore for the quarter. The cash logistics segment saw revenue growth of 4.2% over previous quarter and 41.5% over Q2FY22 driven by new wins in doorstep banking and cash processing outsourcing business.
Rituraj Kishore Sinha, group managing director, SIS, said: “On the completion of five years since being listed, which included two difficult years impacted by the Covid-19 pandemic, we look back with a quiet sense of satisfaction of having built a highly stable and predictable business, resilient to economic variations, derisked from a geography and industry perspective, which consistently delivered revenue and business growth every year and continued distributions to shareholders in the form of dividends and buybacks every year.”
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According to a FICCI report, private security industry (PSI) is one of the largest employers in India—with over 9 million employees and the potential to employ 3 million more by the end of calender year 2022. These unarmed security guards are employed with about 22,000 private security agencies (PSAs), and key players are G4S, SIS, Securitas, Peregrine, CISS, Checkmate, etc, covering areas such as private security, facility management and cash logistics services.
The demand for security services is increasing due to urbanisation, the real and perceived risks of crime, belief that public safety measures are insufficient, and growth of a middle class with assets to protect and means to pay for supplementary security measures.