SIS LIMITED — Q2 FY26 earnings call

Call held 6 Nov 2025

Management summary

SIS reported a strong Q2 FY26, achieving record-high consolidated revenues and EBITDA, driven by robust performance across all segments. Facility Management notably improved its margins, while India Security and International businesses also delivered solid growth. The company successfully closed the AP Securitas acquisition, which is expected to further boost India Security's run rate. Operational efficiencies led to a significant reduction in net debt and an improved ROCE, positioning FY26 as a 'rebound year' with clear margin expansion targets.

Highlights

  • Consolidated revenue reached an all-time high of ₹3,759 crore, up 15% YoY.

  • Consolidated EBITDA grew by 16.2% YoY to ₹168 crore, with a margin of 4.5%.

  • Facility Management (FM) EBITDA margin improved by 90 bps YoY to 5.2%, achieving its highest-ever quarterly EBITDA of ₹33 crore, up 36% YoY.

  • India Security revenue grew 11.5% YoY to ₹1,544 crore, maintaining a 5.3% EBITDA margin.

  • International Security revenue increased 19.3% YoY to ₹1,607 crore, with EBITDA up 20.4% YoY.

  • Operating PAT for the quarter was ₹93 crore, with a PAT margin of 2.5%.

  • Return on Capital Employed (ROCE) improved to 14.3% from 11.7% a year ago.

  • Net debt reduced by 23% to ₹663 crore from ₹857 crore in September 2025.

Key financials

  1. Revenue ₹3,759 Cr +15%YoY
  2. EBITDA ₹168 Cr +16.2%YoY
  3. EBITDA Margin 4.5%
  4. Operating PAT ₹93 Cr
  5. ROCE 14.3%
  6. Net Debt ₹663 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

Share of Revenue
₹3,780 Cr Total
  • International Security ₹1,607 Cr 42.5%
  • India Security ₹1,544 Cr 40.8%
  • Facility Management ₹629 Cr 16.6%

Guidance & targets

Margin

  • India Security EBITDA Margin Margin · within the next few quarters · High confidence 6%

    From 5.5% today

    we still believe that it is very likely that the security business in India and the FM business in India will come to the 6% EBITDA margin range.

    — Rituraj Sinha

  • Facility Management EBITDA Margin Margin · within the next few quarters · High confidence 6%

    From 5.3% today

    — Rituraj Sinha

  • International Business EBITDA Margin Margin · coming quarters · Medium confidence 4-4.5%
    I believe in the coming quarters, we are trying to get the business back in that 4% range. It will take a little bit longer than the Indian businesses to get to 6%. But we are well on course, rightsizing of businesses, SG&A restructuring, abandoning some bad contracts, checking the overtime and bad OT rates. There's a lot of actions underway. But obviously, it will take a little bit of time, but be mindful, this is a 4% business, 4.5% business international.

    — Rituraj Sinha

Profitability

  • Consolidated PAT Profitability · FY26 · Medium confidence ₹400 crore ballpark
    We are guiding towards or moving towards a INR 400 crore ballpark profit after tax, which again will be the highest jump both in PAT and EPS.

    — Rituraj Sinha

Revenue

  • International Business Organic Growth Revenue · FY26 & long-term · Medium confidence mid-teens (FY26), 7-8% (annual long-term)
    We will be growing in the mid-teens. This is not likely to happen year after year. And I think if you're looking to model things out, please stick with 7% to 8% annual growth for the international business.

    — Rituraj Sinha

  • Revenue Contribution from India Revenue · By the end of the year, last quarter · Medium confidence 65%
    By the end of the year, last quarter, I believe that roughly 75% of our EBITDA will be coming out of India and 65% of our revenues will be coming out of India.

    — Rituraj Sinha

  • India Security Monthly Run Rate Revenue · next quarter · Medium confidence ₹850-900 crore
    India will move closer to INR 850 crore, INR 900 crore in the next quarter.

    — Rituraj Sinha

  • AP Securitas Contribution to India Security Monthly Run Rate Revenue · when we consolidate · High confidence ~17%
    we are expecting APS to add ~17% to our India Security monthly run rate when we consolidate.

    — Vineet Toshniwal

Other

  • EBITDA Contribution from India Other · By the end of the year, last quarter · Medium confidence roughly 75%
    By the end of the year, last quarter, I believe that roughly 75% of our EBITDA will be coming out of India and 65% of our revenues will be coming out of India.

    — Rituraj Sinha

  • AP Securitas Consolidation Other · Q3 FY26 · High confidence 100% consolidation (51% ownership)
    Yes. We are 51% owners, so consolidations and minority interest...

    — Vineet Toshniwal

Risks & concerns

  • DSO increase in SIS International

    medium

    DSO increased by 1 day to 69 days due to a one-time situation in SIS International, expected to be corrected next quarter.

    Management acknowledged

  • Unsustainable high growth in International Business

    medium

    Management explicitly stated that the mid-teens growth in International Business for FY26 is a 'one-off' and not sustainable long-term, guiding for 7-8% annual growth instead.

    Management acknowledged

  • Marginal dip in India Security EBITDA margin

    low

    India Security's EBITDA margin saw a 20 basis points dip to 5.3% due to some branding costs from Q1 FY25.

    Management acknowledged

Areas of evasion (1)

  • AP Securitas current margin profile

Q&A highlights

2 direct, 1 evasive
AP Securitas Margin Profile Evasive
Look, I think what we have is from the previous DD, which was done, which is slightly dated information. So, I would request that let's wait for this quarter. When we consolidate, there might be a bit of changes. So, it won't be appropriate for us to give the margins at this stage.

Management deferred providing specific margin guidance for the newly acquired AP Securitas, citing pending consolidation and potential changes, which leaves a gap in understanding the immediate profitability impact.

Asked by Deepak Poddar

Blue-collar Worker Recruitment and Wage Inflation Direct
But I think the mother of all reasons why SIS is twice the size of its nearest competitor is the investment that SIS has made in its supply side. We set up our first training academy in 1982... The total count stands at 21... We have capacity to recruit in 23 to 25 minutes, which gives us extremely high bandwidth.

Management provided a detailed explanation of SIS's robust recruitment infrastructure and strategy, addressing concerns about labor availability and wage inflation, highlighting a competitive advantage in the industry.

Asked by Gautam Trivedi

Sustainability of International Business Growth Direct
Absolutely not sustainable. This is one-off. Australian GDP grows at 2%, 3% per annum. Our growth rate over the last 10 years on average has been more than 7%, close to 8% maybe. So, we are growing twice as fast as the Australian GDP, 2x Australian GDP is our growth. This year is an exception. We will be growing in the mid-teens. This is not likely to happen year after year. And I think if you're looking to model things out, please stick with 7% to 8% annual growth for the international business.

Management clarified that the high H1 FY26 international growth was an exception and not sustainable, guiding analysts to model a more conservative 7-8% annual growth for future periods, which is crucial for accurate forecasting.

Asked by Vatsal Parag Shah

3 min read 7 chapters

Detailed narrative

Strong Revenue Growth Across Segments

SIS reported an all-time high consolidated revenue of ₹3,759 crore for Q2 FY26, marking a 15% year-on-year increase. This growth was broad-based, with India Security revenue at ₹1,544 crore (up 11.5% YoY), Facility Management (FM) at ₹629 crore (up 13.7% YoY), and International Security achieving ₹1,607 crore (up 19.3% YoY). The company's consolidated monthly revenue run rate also reached a record ₹1,300 crore, indicating robust demand and execution.

Margin Expansion and Profitability Improvement

Consolidated EBITDA grew by 16.2% year-on-year to ₹168 crore, with the EBITDA margin improving to 4.5%. Facility Management demonstrated significant margin improvement, with EBITDA reaching 5.2% (up 90 basis points YoY) and achieving its highest-ever quarterly EBITDA of ₹33 crore, a 36% YoY growth. India Security maintained a 5.3% EBITDA margin, while International Business saw a 20.4% YoY EBITDA growth despite flattish margins. The operating PAT stood at ₹93 crore, with a 2.5% margin.

Strategic Acquisition of AP Securitas

SIS successfully closed the acquisition of AP Securitas, a transaction valued at ₹71.2 crore for a 51% stake, based on an 8.3x FY24 EBITDA multiple. This acquisition is projected to add approximately 17% to India Security's monthly run rate from Q3 FY26 onwards. Management emphasized that this strategic move aims to consolidate market share and enhance SIS's position in key high-growth segments such as banking, logistics, and warehousing, with full consolidation expected from Q3 FY26.

Operational Efficiency and Balance Sheet Strength

The company showcased improved operational efficiency, significantly reducing its net debt by 23% to ₹663 crore from ₹857 crore in September 2025. Return on Capital Employed (ROCE) also saw a notable improvement, rising to 14.3% from 11.7% a year ago, attributed to balance sheet cleanup initiatives. Days Sales Outstanding (DSO) experienced a marginal 1-day increase to 69 days, which management attributed to a one-time situation in SIS International, expected to be corrected in the next quarter.

Outlook and Margin Targets

Management expressed strong confidence in FY26 being a 'rebound year,' projecting a consolidated PAT of approximately ₹400 crore. They reiterated the objective to achieve a 6% EBITDA margin for both India Security and Facility Management businesses, aiming for this target within the next few quarters. For the International business, the goal is to return to a 4-4.5% EBITDA margin, with organic growth expected to normalize to 7-8% annually after a 'one-off' mid-teens growth in FY26.

Robust Recruitment and Wage Inflation Management

SIS highlighted its strong supply-side infrastructure, including 21 residential training academies and Automated Recruitment Kiosks (ARK) across 300 branches, enabling it to recruit 3,000 people annually and avoid staffing-related contract losses. While wage inflation averaged 11% over the last decade, it has moderated to ~5% in the past five years. Management noted that wage inflation is a pass-through in contracts and expressed hope for increased government focus on blue-collar worker wages to boost the industry.

Cash Logistics IPO on Track

Management confirmed that the Initial Public Offering (IPO) for its cash logistics business is progressing as planned. This secondary-linked transaction is anticipated to unlock significant value for shareholders and the parent company. The proceeds from the IPO are expected to help SIS reduce its debt and lower interest costs, which will positively impact the company's profit after tax line and Earnings Per Share (EPS).

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