SIS Q4 Review - Compelling Valuations; Rerating To Follow Growth In FY22: Motilal Oswal

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Motilal Oswal Report

Security and Intelligence Services Ltd. reported a mixed Q4 performance, with strong growth of 10.7% year-on-year (led by the International business), compensated by weaker-than expected margins (down 120 basis point quarter-on-quarter) – on account of:

1. An increase in selling general and administrative expenses (growth expectation pre-second wave).

2. A one-time gratuity accounting impact.

While the increase in virus cases and accompanying restrictions would impact business recovery in FY22, the company’s March growth (up 15% YoY) should reassure investors of its ability to weather the impact on business owing to its business and geographical diversification.

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