SIS makes modest gains on market debut after $122 million IPO

MUMBAI (Reuters) - Security and Intelligence Services (India) Ltd (SIS) shares made modest gains on their market debut on Thursday after a $122 million initial public offering, suggesting investors were cautious of the stock's high valuations.

The stock rose as much as 8 percent to a high of 879.80 rupees in early trade, compared with the IPO issue price of 815 rupees. By 0600 GMT, it was trading 5 percent higher at 855.75 rupees, in a Mumbai market that was down 0.24 percent.

SIS, the second-largest security services provider by revenue in India and the first company from the sector to go public, also provides cash logistic services including automated teller machine cash replenishment. It also operates in security services and facilities management in Australia.

While higher demand for security services from companies as well as residential housing societies and opening of new banks will likely drive SIS's business, analysts said expensive valuations could be a drag on sentiment.

"The medium-term outlook will depend on how the company actually performs, otherwise valuations are not comfortable at all," said Alpesh Thacker, an analyst at Centrum Broking.

Cash logistics and pest control were two of the segments analysts would be watching to gauge the company's performance, he added.

A subdued broader market after a crackdown and trading curbs on what the authorities call "shell" companies also weighed on the SIS listing.

The company's IPO last week had been oversubscribed 7 times.

India's IPO market has been on a roll this year, with companies raising $2.6 billion in the first half of 2017. That follows $4 billion worth of initial share sales in 2016 which was the best year for IPOs in six.

Several big listings including those from state-run General Insurance Corp of India and SBI Life Insurance are due in the coming months.

The main stock market index has hit a string of record highs in 2017, as both foreign and domestic funds poured billions of dollars into equities.

($1 = 64.0100 Indian rupees)

(Reporting by Swati Bhat and Devidutta Tripathy; Editing by Stephen Coates)