1. While I do not have the exact numbers for the same I believe the deals were done at very modest valuations. I'll get back to you when I recalculate and tell you the multiples
2. The deal is structured in a way that if all the revenue and bottomline growths targets are met in the future than the payout would be higher or for a lower payout, the company can cash out immediately. The company has not given any explanation for the reason for cash-out except Covid.
3. While I couldn't find any time period for contracts, I believe the renewal rates are very high upwards of 90 percent.
4. Industry competes with a suite of services and price. So if I need 50 security service personnel along with round the clock monitoring + CCTV and other installation, a larger player like SIS is well suited for the contract.
5. The IPO I believe was aggressively priced and along with the fall in small and midcap space in 2018, the company has given underwhelming returns.
6. G4S and Securitas are foreign players which are a good case study. In India there are no relative peers, there are some staffing services company like Team lease you can have a look but the margin and industry profile is a bit different.
7. The new management under Rituraj Sinha has transformed the company. Look at Chubbs acquisition (7x of SIS at the time) of SIS and the than 27 year old Rituraj Sinha's role in it. The management is still young and ambitious and from what I have seen in interviews and concalls comes as a well grounded businessman. You can also see the focus on technology which will further strengthen the organization.
Thanks for the write-up Cash Cow. A few questions would appreciate your response:
1. These previous acquisitions - at what multiple did SIS acquire companies in Australia, NZ, and Singapore?
2. What was the reason for cash-out by the erstwhile management?
3. Would you know how the contracts with customers work? Are these long-term contracts and what would be the typical renewal rates?
4. How does the industry compete? Is it based on price or based on a suite of services offered etc ?
5. The stock was listed in late 2017 and has given modest returns since then, what do you think is the reason for the same?
6. Which other domestic/international businesses do you think we should study to learn more about this space?
7. Any feedback on the quality of the management team?
1. While I do not have the exact numbers for the same I believe the deals were done at very modest valuations. I'll get back to you when I recalculate and tell you the multiples
2. The deal is structured in a way that if all the revenue and bottomline growths targets are met in the future than the payout would be higher or for a lower payout, the company can cash out immediately. The company has not given any explanation for the reason for cash-out except Covid.
3. While I couldn't find any time period for contracts, I believe the renewal rates are very high upwards of 90 percent.
4. Industry competes with a suite of services and price. So if I need 50 security service personnel along with round the clock monitoring + CCTV and other installation, a larger player like SIS is well suited for the contract.
5. The IPO I believe was aggressively priced and along with the fall in small and midcap space in 2018, the company has given underwhelming returns.
6. G4S and Securitas are foreign players which are a good case study. In India there are no relative peers, there are some staffing services company like Team lease you can have a look but the margin and industry profile is a bit different.
7. The new management under Rituraj Sinha has transformed the company. Look at Chubbs acquisition (7x of SIS at the time) of SIS and the than 27 year old Rituraj Sinha's role in it. The management is still young and ambitious and from what I have seen in interviews and concalls comes as a well grounded businessman. You can also see the focus on technology which will further strengthen the organization.
Great read as always , do keep up the good work.
Thanks a lot.
Great read as always , do keep up the good work.