SIS IPO Lists at a Pre­mium, but Ends Day 7% Be­low Issue Price

The Economic Times - - Smart - Mar­ket In­tel­li­gence

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

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