NIS Management BSE SME IPO review (Not Rated)

•    The company is engaged in providing staffing services across the service sectors.
•    It has customers across the board that includes corporates, hospitality sector, airports, Banks, etc., and also provides facility management.
•    The company marked growth in its top and bottom lines. However, its bottom line remained stagnant for FY24 and FY25, despite growth in top lines.
•    Based on its recent financial data, the IPO appears fully priced. 
•    Well-informed investors may park funds for medium to long term.

ABOUT COMPANY:
NIS Management Ltd. (NML) commenced operations with a primary emphasis on delivering security guards and investigative services. Over time, the company expanded its portfolio, securing significant contracts including prominent with esteemed organizations and other major corporate entities. The company obtained esteemed contracts for the facility management division, securing notable contracts from esteemed hospitality groups such as the Taj Group and Oberoi Grand, among others in 2006. Presently, NIS Management Limited sustains a robust growth trajectory, achieving a Compound Annual Growth Rate (CAGR) ranging between 10% to 13% annually. The company boasts a diverse clientele encompassing esteemed organizations such as Reliance Retail, Piramal Group, HDFC Bank, Torrent Power, and several key airports and government institutions across India.

In its evolution, the company expanded into electronic security services, initially providing alarm systems to jewellery stores. This segment eventually evolved into a distinct entity, NIS Facility Management Services Private Limited, a wholly-owned subsidiary catering to state governments and Public Sector Undertakings (PSUs) with comprehensive security solutions. Concurrently, Keertika Academy Private Limited was established, focusing on initiatives aimed at skill development. Recognized as a partner of the National Skill Development Corporation (NSDC), the academy has played a pivotal role in various vocational training programs under schemes like DDU-GKY and PMKVY, significantly contributing to workforce empowerment and development.

With a steadfast commitment to excellence and innovation, NML continues to fortify its position as a leader in integrated security, facility management, and skill development services in India. The company will be a professional service firm providing complete security & facility management solutions. It shall achieve Security Services, Housekeeping Services and Facility Management Services with CCTV projects dominating significant market share in all relevant segments and adequate financial adequacy for growth and sustenance. As of June 30, 2025, it had 16609 employees (including contact workers) on its roll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book-building route combo IPO of 5406000 equity shares to mobilize Rs. 60.01 cr. at the upper cap. The issue consists of 4662000 fresh equity shares (worth Rs. 51.75 cr. at the upper cap), and an Offer for Sale (OFS) of 744000 equity shares (worth Rs. 8.26 cr. at the upper cap). The company has announced a price band of Rs. 105 – Rs. 111 per share of Rs. 10 each. The IPO opens for subscription on August 25, 2025, and will close on August 28, 2025. The minimum application to be made is for 2400 shares and in multiple of 1200 shares thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 27.30% of post-IPO paid-up equity capital of the company. From the net proceeds of the issue, the company will utilize Rs. 36.00 cr. for working capital, and the rest for general corporate purposes.

The IPO is solely lead managed by Share India Capital Services Pvt. Ltd., while Maashitla Securities Pvt. Ltd. is the registrar to the issue. Share India Securities Ltd. is the market maker. 

The company has issued entire initial equity shares at par, and issued bonus shares in the ratio of 3.5 for 1 in November 2009, 1.5 for 1 in September 2018, and 1 for 1 in August 2024. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. Nil, Rs. 0.48, Rs. 1.90, and Rs. 1.99 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 15.14 cr. will stand enhanced to Rs. 19.80 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 219.78 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted total Income/Net Profit of Rs. 341.96 cr. / Rs. 16.14 cr. (FY23), Rs. 380.06 cr. / Rs. 18.39 cr. (FY24), and Rs. 405.33 cr. / Rs. 18.68 cr. (FY25). 

For the last three fiscals, the company has reported an average EPS of Rs. 12.25, and an average RoNW of 14.03%. The issue is priced at a P/BV of 1.10 based on its NAV of Rs. 101.02 as of March 31, 2025, but its post-IPO NAV data is missing from offer documents.

If we attribute its FY25 super earnings on post-IPO expanded equity base, then the asking price is at a P/E of 11.77, and based on its FY24 earnings, the P/E stands at 11.96. Thus, based on its recent financial data, the issue appears fully priced.

The company has posted PAT margins of 4.74% (FY23), 4.86% (FY24), 4.64% (FY25), and RoCE Margins of 21.27%, 22.11%, 17.63%, respectively for the referred periods. 

DIVIDEND POLICY:
The company has not declared any dividends for any financial year. It has adopted a dividend policy, based on its financial performances and future prospects.

COMPARISON WITH LISTED PEERS:
As per offer document, the company has shown Quess Corp., SIS Ltd., and Teamlease Service, as their listed peers. They are trading at a P/E of around 16.0, 16.4, and 27.1 (as of August 21, 2025). However, they are not truly comparable on an apple-to-apple basis. This comparison appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORDS:
This is the 18th mandate from Share India Capital in the last three fiscals (including the ongoing one). Out of the last 17 listings, 2 opened at discount, 4 at par, and the rest with premium ranging from 5.33% to 120% on the date of listing.