Buy Security and Intelligence Services; target of Rs 1370: Axis Direct

Axis Direct's research report on Security and Intelligence Services

We met with management of SIS. Our earnings growth estimate of ~38% CAGR over FY18E-20E stems from our confidence that SIS can deliver: (1) 25%+ sales growth in India security based on its current monthly run-rate, (2) Margin expansion across segments, (3) Cash and pest control businesses expected to break even and (4) Higher tax benefit under 80JJAA after recent amendment in the act.

Outlook

We have not built inorganic growth into our estimates, which provides a potential upside to our numbers. We believe SIS is well-positioned to tap the large opportunity landscape in business services. We reiterate BUY with a TP of Rs 1,370 (30x FY20E). For all recommendations report, click here

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