Safecukre Services BSE SME IPO review

•    The company is primarily engaged in providing services relating to private securities, e-surveillance, facility management, corporate interior fit outs, etc. in India.
•    It marked growth in its top and bottom lines for the reported periods.
•    Outperforming industry standards with super profits from FY24 onwards raises eyebrows and concern over its sustainability going forward.
•    Around 16% spending for IPO process indicates fully structured mode of the issue.
•    Based on its recent financial data, the issue appears fully priced.
•    There is no harm in skipping this pricey and dicey “High Risk/Low Return” IPO.

ABOUT COMPANY:
Safecure Services Ltd. (SSL) is primarily engaged in providing services relating to private security, e-surveillance, facility management and also corporate interior fit outs work in India. The company, through its wholly owned Subsidiary, Safesense Tech Private Limited, provide e-surveillance services such as distinctive monitored intrusion alarm system and services (i.e., central intrusion detection and prevention services) in India. It provides services of real-time monitoring specially for ATMs and Bank Branches (i.e., site monitored 24/7 in real-time by its e-surveillance professionals to raise alerts the moment they detect any criminal or suspicious or abnormal activity). Over the last decade, it has grown in numbers as well as widening spectrum of services. Presently, it is, through team of trained employees, providing its services to esteemed clientele across various locations in India engaged in different sectors such as private and public sector, financial institutions, multinational corporations, and other industries.

Its diverse portfolio of services comprises of (i) Security Services comprising of manned guarding, event management, ATM management and providing technology backed security services; (ii) E-Surveillance and monitoring of ATM & Bank Branches comprising electronic security services and alarm monitoring and response services, including electronic security and surveillance solutions with trained manpower; (iii) repair & maintenance of ATMs and Facility Management Services comprising of housekeeping services and business support services; and (iv) Interior Fit outs Work for corporate. Its extensive portfolio of services offering enables it to grow customer relationships and scope of engagements and serve as a single point of contact for multiple services.

Keeping in trend with time and technology, it proactively designs and implements training modules, to reinforce client’s trust. The company has also taken various initiatives to implement the technology driven system to improve connectivity across its offices and operations and provide for data-based decision-making. For FY25, its more than 57.30% revenue from operation is generated from the top 10 customers. As of June 30, 2025, it had 1679 billable employees and 170 unbillable employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden IPO of 3000000 equity shares of Rs. 10 each at a fixed price of Rs. 102 per share to mobilize Rs. 30.60 cr. IPO opens for subscription on October 29, 2025, and will close on October 31, 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 29.88% of post-IPO paid-up equity capital of the company. The company is spending Rs. 4.85 cr. (15.85%) for this IPO process, and from the net proceeds of the issue, the company will utilize Rs. 13.00 cr. for working capital, Rs. 4.75 cr. for repayment/prepayment of certain borrowings by the company, Rs. 3.50 cr. repayment/prepayment of certain borrowings by its subsidiary, and Rs. 4.50 cr. for general corporate purposes. Higher IPO process spending indicates pure structured format of the issue.

The IPO is solely lead managed by Sun Capital Advisory Services Pvt. Ltd., while MUFG Intime India Pvt. Ltd. is the registrar to the issue. Giriraj Stock Broking Pvt. Ltd. is the market maker. The IPO is underwritten to the tune of 15% by Sun Capital Advisory and 85% by Giriraj Stock Broking.            

The company has issued entire initial equity shares at par value, and issued bonus equity shares in the ratio of 15 for 1 in August 2020 and 3 for 1 in February 2024. The average cost of acquisition of shares by the promoters is Rs. 0.008, Rs. 0.156, and Rs. 12.50 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 7.04 cr. will stand enhanced to Rs. 10.04 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 102.41 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit, of Rs. 47.74 cr. / Rs. 3.98 cr. (FY23), Rs. 63.06 cr. / Rs. 5.69 cr. (FY24), Rs. 73.27 cr. / Rs. 6.16 cr. (FY25). For Q1 of FY26 ended on June 30, 2025, it earned a net profit of Rs. 1.99 cr. on a total income of Rs. 18.36 cr. Thus, in a pre-IPO year, from FY24 onwards, it posted inflated financial data which is perhaps for fetching fancy valuations.

For the last three fiscals, the company has reported an average EPS of Rs. 7.97, and an average RoNW of 34.40%. The issue is priced at a P/BV of 3.09 based on its NAV of Rs. 32.97 as of June 30, 2025, and at a P/BV of 1.90 based on its post-IPO NAV of Rs. 53.60 per share. 

If we attribute its FY26 super annualized earnings on post-IPO expanded equity base, then the asking price is at a P/E of 12.88, and based on its FY25 earnings, the P/E stands at 16.64. Thus, with the inflated earnings from FY24 onwards, the issue appears fully priced. The sustainability of such margins going forward is a major concern, as it is operating in a highly competitive and fragmented segment.

The company has posted PAT margins of 8.41% (FY23), 9.19% (FY24), 8.26% (FY25), NA% (Q1-FY26), and RoCE Margins of 30.41%, 28.34%, 22.48%, NA%, respectively for the referred periods. 

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It has adopted a dividend policy in February 2024, based on its financial performances and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown SIS Ltd., and Krystal Integrated Services as its listed peers. They are currently trading at a P/E of 15.2, and 13.8 (as of October 27, 2025). However, they are not truly comparable on an apple-to-apple basis.

MERCHANT BANKER’S TRACK RECORDS:
This is the 5th mandate from Sun Capital in the last three fiscals, out of the last 4 listings, 2 opened at discount, and the rest with premium ranging from 5.13% to 12.18% on the listing date. The LM has an average track record.