SIS IPO Lists at a Premium, but Ends Day 7% Below Issue Price
Mumbai: Shares of Security and Intelligence Services (India) ended 7% below their issue price at 756.70 on Thursday after listing at a premium earlier in the day. Against its issue price of ₹ 815, the stock listed at ₹ 875 but lost steam after hitting a high of ₹ 878 to end in the negative.
SIS, which provides security solutions and business support services to a wide range of customers across India and Australia had priced its ₹ 780-crore issue at ₹ 805-`815. Its IPO, that was open for subscription between July 31 and August 2, was subscribed seven times.
Analysts said that weakness in the market for the fourth consecutive session partly contributed to the stock losing gains.
“Across the board selling in the market due to global factors pulled the stock down,” said Akash Jain, head of research at Ajcon Global.
The brokerage had given a ‘subscribe’ rating to SIS’ IPO, citing its leading position in facility management services in India.
“The stock can easily give 40% returns on an annual basis,” said Jain.
SIS revenue grew at an annualised rate of 14.2% to ₹ 4,567 crore between FY13 and FY17, while operating profit rose 15.5% to ₹ 223 crore in the same period.
However, some believe the issue was overpriced. At the upper end of the IPO price band, the stock’s P/E was 65 times based on FY17 earnings.
“The business model is not convincing. Quess Corp and Teamlease both have average realisation per billing employee of ₹ 20,000 to ₹ 22,000 per month, which is higher than domestic realisation of ₹ 12,500 per month,” Geetanjali Kedia, senior analyst at advisory firm SPTulsian.com, said, adding, “It is not attractive beyond ₹ 650. HIGHS & LOWS