SIS Ltd Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Gopinath Reddy - Gopinath Reddy - Analyst : Sir, this is regarding the Australia business. My question is, if after this three quarters that we are going to have this problem of margin compression. Would we be comfortably able to retain all our existing customers and improve our margins or do you think that we may have to lose some customers? How will it go?

Question: Gopinath Reddy - Gopinath Reddy - Analyst : Okay. The second question is regarding the Indian situation, sir. Is there any slowdown that you are noticing in any areas where we are into or how is it going, can you just give me color on it?

Question: Gopinath Reddy - Gopinath Reddy - Analyst : Okay. Thank you, sir. That's it from my side.

Question: Gopinath Reddy - Gopinath Reddy - Analyst : Sir, my last question, What is your guidance towards the ROE that we are expecting in the next couple of years or maybe after this Australia issue is gone? Where will it normalize at what levels?

Question: Gopinath Reddy - Gopinath Reddy - Analyst : Sir, when our company being the most, one of the most efficient companies in this sector and being a market leader, when we are having such low returns, the other smaller smaller companies must be in stress kind of a situation. Are there any opportunities that we are actually looking at acquiring right now?

Question: Gopinath Reddy - Gopinath Reddy - Analyst : Okay. Can you talk about the Singapore acquisition that we have done, sir? How is it going? Any comments on it?

Question: Gopinath Reddy - Gopinath Reddy - Analyst : Yes, sir. Thank you, sir. That's it from my side.

Question: Yash Darak - RSPN Ventures Private Limited - Analyst : Hello, sir. Can you hear me?

Question: Yash Darak - RSPN Ventures Private Limited - Analyst : Yeah. So as far as (inaudible) concerned, do we get the (inaudible) benefit on the MS business as well?

Question: Yash Darak - RSPN Ventures Private Limited - Analyst : Understood. And secondly, if you could guide on to the FY25 estimated revenue on FY24 revenue, any trajectory, if you could guide on.

Question: Yash Darak - RSPN Ventures Private Limited - Analyst : Okay, sir. The last question with regards to (inaudible) tax rate, if you could provide on the full year effective tax rate including all the businesses. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2024 / 8:30AM, SISI.NS - Q2 2025 SIS Ltd Earnings Call

Question: Yash Darak - RSPN Ventures Private Limited - Analyst : And for international businesses including Australia, Sngapore, New Zealand.

Question: Yash Darak - RSPN Ventures Private Limited - Analyst : Okay, sir. Understood. Thank you, sir.

Question: Amit Kumar - Determined Investments - Analyst : Yeah, thank you so much for the opportunity, sir. My first question relates to industry growth. So related to specifically the India, security growth of 6% and the facility management growth, (inaudible) I mean, how is the industry growth, sort of shaping up because this seems to be significantly below. I mean, if you look at nominal GDP itself, right? And we have as an industry, we have a lot of unorganized to organized shift opportunity available. So I presume that is also sort of playing out in the background, but the nominal GDP growth of [7 plus 5] is about 11% or 12%-odd. So related to that, 6%, 7%, the end of India growth seems fairly muted and if this is an industry sort of issue, can you just highlight, I mean, any sort of specific pressure points that the industry is growing through presently?

Question: Amit Kumar - Determined Investments - Analyst : For a quarter? The India security has grown by 6% right? 6.3%.

Question: Amit Kumar - Determined Investments - Analyst : Okay. And the second question is that, the growth being as a II , I think if you would get back to mid 10s, revenue growth, I think this point would be taken care of automatically. But I mean, to the extent that, the, if the existing sort of growth, you know, in the business is, I guess, it's a pointless question at this point of time, let's discuss this at the end of the year once we have a full year growth number in front of us. So my only point was that, as you grow is showing to the extent that you're growing at, 10%, 12% 15% you will also be adding manpower to basically support that growth and that would also mean that your (inaudible) benefits will for the remain, in fact, now the growth basically table down to, what we are seeing right now in this quarter. So which is I sort of ask, are there any sort of pressure points or, if there is any temporary dislocation in this particular quarter. But if your growth basically, (inaudible) to these, then there is a risk that we might, it's not fully, I think partially, those are the, (inaudible) benefits basically also, and that's what has been an impact on your profitability. And so, (multiple speakers) I think probably a pointless question right now. But I mean, just a theoretical exercise if at all that, I mean, how do you sort of manage growth and--

Question: Amit Kumar - Determined Investments - Analyst : Okay. Understood. Great. Thank you. That's it from my end. I come back with more.

Question: Yash Darak - RSPN Ventures Private Limited - Analyst : Sir, sorry with regards to the Australian wage revision, I missed out that part if you could explain, when does the (inaudible) happen and when it reflects onto our international business revenue.

Question: Yash Darak - RSPN Ventures Private Limited - Analyst : Okay, sir. Thank you.

Question: Aasim Bharde - DAM Capital Advisors - Analyst : Yeah, Hi, Rituraj and team. So I had a question on the facility business margins. Now that we are trending in the 4.2%, 4.3% EBITDA range. I want to understand if this is the best case scenario now or can it still trend higher closer to the PRE COVID levels of 6% to 7%?

Question: Aasim Bharde - DAM Capital Advisors - Analyst : When you say cross margins are still intact. Does that mean that whatever changes that you are doing in terms of low value customers being removed, is that already done and dusted? And now everything that can be done is on the DNA level.

Question: Aasim Bharde - DAM Capital Advisors - Analyst : Gross margin impact?

Question: Aasim Bharde - DAM Capital Advisors - Analyst : And this customer rationalization is another one year down the line is when most of it will be done is it?

Question: Aasim Bharde - DAM Capital Advisors - Analyst : Okay. And second question is basically on, (inaudible), how much does it contribute to your India security revenue and EBITDA?

Question: Aasim Bharde - DAM Capital Advisors - Analyst : Okay.

Question: Aasim Bharde - DAM Capital Advisors - Analyst : Fair point. And just to understand this particular business, I think EBITDA margins are higher but since it could be a CapEx intensive one, are PBT margins similar to the security business in this case?

Question: Aasim Bharde - DAM Capital Advisors - Analyst : Slightly better. Okay. Thank you very much everyone.