SIS Ltd –CNBC Interview –MD Rituraj Sinha–10th Oct22 :
–International business contributes less than 50% of overall business , in the last 2 Qtrs some changes (1) Covid related temporary work is finished i.e high margin temp. contracts are now over & the routine contracts which were downsized during covid are back up (2) Major development is that Australia has seen highest minimum wage increase in the last 10 yrs which will augur well for us
–Higher wage revision is beneficial for you ? –contracts have inbuilt rise and fall clauses so we pass that on to customers , there is no renegotiation its a pass through but there will be a catch up as we will start paying minimum wage upfront & cust. process that with arrears & the new price becomes effective going forward. Reasons for why it will be good for us ? –(1) The revenue goes up (2) corresponding impact in EBITDA which on $value goes up (3) Higher wages result in better retention and lesser shortages which is good for ops and business continuity
–Margin improvement ? –The international business pre-covid was 4/4.5% margins & in international business will be the same now as well
–Overall Consolidated for SIS was 5.5/6% EBITDA Margin & we will settle around 5.5/6% going forward
–On India business ( 55/60% of total revenues ) you will see robust growth in security and FM. This Q2 have been very strong on growth side & significant margin improvement. So overall we are moving in this direction.
–FY23 outlook ? –Consolidated EBITDA margin will be 5.5/6% by Q4 due to India business improving , its margin profile and international business should also be able to do well due to price revisions.
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