SIS delivered a strong Q3 FY26, achieving record revenues and EBITDA, driven by robust performance across all segments. The quarter was marked by a significant one-time charge of ₹290 crores related to new Labor Codes, which management views as a conservative provision with high recovery potential. The company also highlighted improved operational efficiency and a commitment to enhanced shareholder returns through both dividends and potential buybacks.
vs Q4 FY26
Notable Quotes from the Call
Most Confident Moment
But I can say with confidence, based on 9-month results, that FY'26 seems to be the year of rebound for SIS.
Least Confident Moment
As regards a timeline, I think I won't venture a guess, but we are on track
| Metric | Value | YoY |
|---|---|---|
| Consolidated Revenue | ₹4.2K Cr | +24.5% YoY |
| Operating EBITDA | ₹196 Cr | +25.2% YoY |
| Operating EBITDA Margin | 4.5% | — |
| Operating PAT | ₹100.8 Cr | 0% YoY |
| EPS | ₹7.2 | — |
| ROCE | 15.2% | — |
Segment Breakdown
Share of Revenue
| Metric | Latest | Trend |
|---|---|---|
| Revenue(crores) | 4489 | |
| EBITDA(crores) | 207 | |
| EBITDA Margin | 4.6% | |
| Net Debt(crores) | 663 | |
| DSOs(days) | 67 | |
| Operating PAT(crores) | 105.5 |
| Category | Target | Priority |
|---|---|---|
| Dividend | Dividend per share→₹7 | High |
| Shareholder Returns | Buyback→another chunk | Medium |
| Profitability | ROCE→upward movement from 15% | High |
| Profitability | ELI Scheme Benefit→significant flow-through | Medium |
| Margin | EBITDA Margin (Security)→pre-COVID levels (6%) | Medium |
| Margin | EBITDA Margin (Facility Management)→pre-COVID levels (6%) | Medium |
| Margin | EBITDA Margin (International)→pre-COVID levels (4-4.5%) | Medium |
| Revenue Growth | India Security Growth→11-12% | Medium |
| Revenue Growth | Facility Management Growth→12.5-15% | Medium |
| Revenue Growth | International Market Growth→7.5% | Medium |
| Revenue Growth | Overall Consolidated Growth→12% | Medium |
| Business Performance | One SIS Monthly Revenue Run Rate→₹10 crores | High |
| Business Performance | VProtect Connections→30,000 | High |
| Business Performance | VProtect Monthly Revenue→₹10 crores | High |
| Business Performance | VProtect EBITDA Margin→15% | High |
| Severity | Risk |
|---|---|
high | One-time exceptional charge from Labor Codes A ₹290 crores charge for prior-period gratuity and leave liabilities due to new wage definition, though management expects high recovery. Management |
medium | Margin volatility during contract renegotiation due to Labor Codes Renegotiating contracts and invoicing under new Labor Codes may cause temporary margin volatility. Management |
medium | Lower margins in International Security due to clearance requirements Some international sites require more clearances, leading to overtime and pulling down margins, which is expected to ease as unemployment rates improve. Management |
SIS reported a strong Q3 FY26, achieving a record consolidated revenue of ₹4,185 crores, representing a 24.5% year-on-year growth. Operating EBITDA also reached a record ₹196 crores, up 25.2% year-on-year, with an operating EBITDA margin of 4.5%. India Security led the growth with ₹1,898 crores revenue (up 33.7% YoY), while Facility Management grew 10.3% YoY to ₹636 crores, and International Security increased 20.8% YoY to ₹1,670 crores. This performance indicates strong execution across all business lines.
The company recognized a one-time📎 exceptional charge📎 of ₹290 crores for prior-period gratuity and leave liabilities, aligning with ICAI guidance and a conservative approach to new Labor Code definitions. Management expressed confidence in recovering a significant portion of this charge from customers. Strategically, the new Labor Codes are viewed as a 'structural tailwind,' expected to reduce compliance arbitrage and shift market share from unorganized to organized players, potentially expanding SIS's addressable market from 40% to 60-70% over the next 3-5 years.
SIS demonstrated margin improvement initiatives, with India Security's operating EBITDA margin (excluding acquisition costs) stable at 5.5%. Facility Management saw an 80 basis point expansion in EBITDA margins to 5.4%, with EBITDA growing 29.1% to ₹34.3 crores. International Security's EBITDA margin was 3.8%, showing a 19.2% YoY growth. The integration of AP Securitas, acquired this quarter, is on track to uplift its 4% EBITDA margin to align with SIS's organic margins through SG&A rationalization and other efficiencies.
The Board has decided to return money to shareholders through both dividends and buybacks annually, announcing an INR 7 dividend for FY26 as a first step, with a potential buyback in the second half of the year. This strategy is a response to market feedback and aims to balance different shareholder preferences. The company's Return on Capital Employed (ROCE) has improved significantly to 15.2% from 12% a year ago, with management targeting further upward movement from this level. DSOs were also tightened to 67 days, reflecting improved operational efficiency.
For FY27, SIS projects India Security growth at 11-12%, Facility Management at 12.5-15%, and International Security at 7.5%, leading to an overall consolidated growth of approximately 12%. The company aims to restore segment EBITDA margins to pre-COVID levels (6% for Security and FM, 4-4.5% for International). Strategic initiatives like One SIS are now profitable with a monthly revenue run rate of ₹10 crores, and VProtect has reached 30,000 connections, generating ₹10 crores in monthly revenue with a 15% EBITDA margin.