SIS LIMITED — Q1 FY26 earnings call

Call held 8 Sep 2025

Management summary

SIS Limited announced the acquisition of a 51% stake in A P Securitas, a 40-year-old firm with approximately INR 1,000 crore in FY24 revenue. This strategic move significantly expands SIS's market share, particularly in BFSI and logistics, and is expected to double the size of its nearest competitor in the Indian security business. The transaction, valued at an initial INR 73.4 crore for the first tranche, is structured to incentivize performance and is projected to yield over 21% IRR for SIS, funded entirely through internal accruals without impacting the company's strong balance sheet.

Highlights

  • SIS acquired a 51% stake in A P Securitas (APS).

  • APS reported approximately INR 1,000 crore revenue in FY24.

  • Post-acquisition, SIS's security business run rate (pro rata FY24) will reach INR 6,100 crore.

  • APS's FY24 EBITDA margin was 4.3%, and PAT margin was 2.27%.

  • The first tranche consideration for 51% stake is INR 73.4 crore, implying an 8.3x EBITDA multiple.

  • The acquisition is expected to deliver over 21% IRR for SIS Group in a base case scenario.

  • SIS's net debt-to-EBITDA will remain below 1x post-transaction, funded by internal accruals.

  • Consolidation of APS financials into SIS is expected from Q3 FY26 onwards.

Key financials

2 periods

FY24

  • APS Revenue
    ₹1,000 Cr
  • APS Net Debt
    ₹100 Cr
  • APS Net Worth
    ₹86 Cr
  • APS EBITDA Margin
    4.3%
  • APS PAT Margin
    2.3%

Pro Rata FY24 Post-Acquisition

  • SIS Security Run Rate
    ₹6,100 Cr

What they filed

Q1 FY27: revenue up 29.8%, net profit up 9.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue3,269 3,362 3,428 3,548 3,759 +15%4,185 +24%4,489 +31%4,604 +30%
EBITDA145 157 165 152 168 +16%189 +20%207 +25%207 +36%
Net profit69 102 -223 93 81 +17%-138 −235%102 +146%102 +10%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • A P Securitas
    15% Facility Management Share85% Security Share

Guidance & targets

Other

  • Balance stake acquisition Other · Next 3-4 years · High confidence Over 3 to 4 years
    What we have acquired now is 51% and the balance will be acquired over a 3 to 4-year period.

    — Vineet Toshniwal, President, M&A and Investor Relations – SIS Limited

  • Consolidation of APS financials Other · Q3 FY26 onwards · High confidence Q3 onwards
    So, you will see the consolidation happening in Q3 onwards, and then the actual numbers will be available once the consolidation happens.

    — Vineet Toshniwal, President, M&A and Investor Relations – SIS Limited

  • Seller exit multiple Other · High confidence Up to 9x (if perform well)
    There is a rachet structure that allows the seller to sell up to 9x if they perform very well. But there is also a flow should they underperform, one could buy those shares at a lower multiple.

    — Rituraj Sinha, Group Managing Director – SIS Limited

  • Shift from services towards solutions Other · By 2030 · High confidence —
    And second is to shift from services towards solutions.

    — Rituraj Sinha, Group Managing Director – SIS Limited

Profitability

  • Minimum ex IRR Profitability · High confidence 20%
    Our investment target always has been stated previously by the MD. Also, we target a minimum ex IRR of 20%.

    — Vineet Toshniwal, President, M&A and Investor Relations – SIS Limited

  • EBITDA CAGR for seller incentive Profitability · Next 3 years · High confidence 15% plus or 20% plus
    It's incentivised to the seller to deliver CAGR of EBITDA. And there are slabs like 15% plus or 20% plus, which changes the EBITDA multiple.

    — Vineet Toshniwal, President, M&A and Investor Relations – SIS Limited

  • IRR for SIS Group (base case scenario) Profitability · High confidence More than 21%
    And second, that on an ex-IRR basis, in a base case scenario, this deal should be delivering more than 21% IRR for SIS Group.

    — Rituraj Sinha, Group Managing Director – SIS Limited

Margin

  • Blended EBITDA margin for security business in India Margin · Medium confidence Close to 6%
    We believe that our security businesses on a blended basis, security business in India should be delivering close to 6% EBITDA margin.

    — Rituraj Sinha, Group Managing Director – SIS Limited

  • Blended EBITDA margin for FM business in India Margin · Medium confidence Close to 6%
    Same for our FM business in India, close to 6% EBITDA margin. So, we are traveling in that direction.

    — Rituraj Sinha, Group Managing Director – SIS Limited

Market Share

  • Market share in Security and FM in India Market Share · By 2030 · High confidence Double
    We want to build, double our market share in Security and FM in India.

    — Rituraj Sinha, Group Managing Director – SIS Limited

Risks & concerns

  • Margin overhang from the acquisition

    low

    Rituraj Sinha stated the margin overhang would be 'ballpark range of 0.1%' at the security business level and 'probably a fraction of that' at the group consolidation level.

    Management acknowledged

Q&A highlights

3 direct
Implied EV and initial consideration for A P Securitas Direct
Currently, the transaction that we filed is 51% stake. What we have is an interim consideration. There are significant closing formalities, as I said, to be done and FY '25 audit yet to be closed. So, once we receive the audited balance sheet and we proceed to closing, adjusting for net debt and net working capital the exact EV will be determined.

Clarifies that the initial consideration is interim and the final EV will be determined after FY25 audit and adjustments, addressing concerns about the seemingly low initial payment.

Asked by Neha, Individual Investor

Rationale for acquisition and alignment with Vision 2030 Direct
APS is consolidation for market share in key segments like banking, logistics, which are very vital segments of our economy... We want to build, double our market share in Security and FM in India. And second is to shift from services towards solutions. So, APS meets both those objectives very well.

Explains the strategic fit of the acquisition, emphasizing market share consolidation in key sectors and alignment with SIS's long-term growth and service transformation goals.

Asked by Anant Mundra, Mytemple Capital

Later payment for the remaining 49% stake and EBITDA multiple Direct
So, 49%, as I said, it's a tranche-based structure. It's incentivised to the seller to deliver CAGR of EBITDA. And there are slabs like 15% plus or 20% plus, which changes the EBITDA multiple... As of right now, the first tranche is happening at roughly 8.3x EBITDA multiple. There is a rachet structure that allows the seller to sell up to 9x if they perform very well.

Details the performance-linked payment structure for the remaining stake, providing insight into the valuation mechanism and management's confidence in APS's future performance.

Asked by Shanti Gawas, Individual Investor

2 min read 5 chapters

Detailed narrative

Strategic Acquisition of A P Securitas

SIS Limited announced the acquisition of a 51% stake in A P Securitas (APS), a well-established 40-year-old firm with a pan-India presence. APS reported approximately INR 1,000 crore in revenue for FY24 and employs close to 40,000 people. This acquisition marks SIS's first significant inorganic activity in over five years, aiming to strengthen its position in the security and facility management sectors.

Financial Profile of A P Securitas

For FY24, A P Securitas recorded an EBITDA margin of 4.3% and a PAT margin of 2.27%. The company had a net debt of approximately INR 100 crore and a net worth of INR 86 crore. APS's business is predominantly security, with roughly 15% attributed to facility management services, and a significant portion (34%) of its portfolio comes from the BFSI sector.

Market Impact and Strategic Alignment

The acquisition is set to significantly boost SIS's market leadership, increasing its pro rata FY24 security business run rate to INR 6,100 crore, making it twice the size of its nearest competitor. This move aligns with SIS's Vision 2030 objectives to double its market share in Security and FM in India and shift from services towards integrated solutions. APS's focus on solution selling and its strong presence in key segments like banking and logistics were key attractive points.

Transaction Structure and Funding

The initial consideration for the 51% stake is INR 73.4 crore, with the balance to be acquired over a 3 to 4-year period through a tranche-based structure. The first tranche implies an 8.3x EBITDA multiple, with a rachet mechanism allowing the seller up to 9x if performance targets (15% or 20% plus EBITDA CAGR) are met. SIS expects the deal to deliver over 21% IRR in a base case scenario, funded entirely through internal accruals, maintaining SIS's net debt-to-EBITDA ratio below 1x.

Integration and Future Outlook

Consolidation of APS's financials into SIS is anticipated from Q3 FY26 onwards, following the completion of closing formalities and the FY25 audit. Management expects a minor margin overhang of approximately 0.1% at the security business level, which is deemed manageable. The long-term plan is to converge the blended EBITDA margins for both security and FM businesses in India to around 6%. SIS intends to continue operating APS with its current management for at least the next three years.

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