Strong start paves the way for future growth
• Revenue from operations for BLS International Services (BLSIN) grew 28.5% YoY to INR493cr (est. INR490cr) in Q1FY25. Growth was mainly driven by the visa and consular (VC) business which grew a robust 36% YoY on the back of an 18% rise in both volumes and net revenue per application. The digital business posted a tepid revenue in Q1FY25.
• EBITDA surged by 66.3% YoY to INR133cr due to transition to self-managed centres from partner run ones at various locations in the VC business and better service mix in the digital segment.
• EBITDA margin expanded by 615bp YoY to 27% due to greater contribution from the high margin VC business (91% contribution to EBITDA from 89% YoY and 85% QoQ).
• PAT (after minority interest) rose 70% YoY to INR114cr led by a strong operational performance.
• It clocked over 3.5cr transactions in the business correspondent segment, with a gross transaction value of over INR20,000cr in Q1FY25.
• The digital business had more than 27,000/1.1lk customer service points (CSP)/touch points.
• It signed a service provider agreement with Axis Bank and generated leads worth ~INR1,000cr for private banks like HDFC Bank and Kotak Mahindra Bank in Q1FY25 as against INR602cr generated in FY24.
• BLSIN completed the acquisition of iDATA in Q1FY25. iDATA had generated a revenue/EBITDA of ~INR246cr/ ~INR144cr in CY23. This acquisition enhances BLSIN’s operational scale and profitability in the VC services market. It aligns with its growth strategy by integrating a profitable entity and expanding its footprint/market share in Turkey/ Europe. The financial benefits from this acquisition will be visible from Q2FY25.
An established player in the visa services business
The USD2.6bn visa outsourcing industry has high entry barriers and is dominated by three players, with VFS Global commanding a market share of 50–55%. BLSIN and TLSContact each control 10–15%. Despite being less than two decades old, only 40% of the visa market is outsourced, up from 22% in 2010, thus offering significant growth potential. Consulates have delegated tasks to service providers for better efficiency and cost savings. This niche industry offers BLSIN substantial opportunities to leverage its strong brand and competitive advantages. Since its inception in 2005, it has expanded to 66 countries, serving 46 government clients, and processing over 65mn applications. Recent strategic moves include renewed contracts with the Spanish and Indian governments in Canada, global contracts from Slovakia, multiple agreements with other nations, and the acquisition of iDATA in Turkey to further enhance its capabilities.
High growth potential in digital services
BLSIN consolidated its e-governance and BC businesses in the digital services segment, targeting G2C services with low tech penetration. The company is active in several Indian states and benefits from the greater outsourcing of citizen services by governments. As a tech-enabled provider, it offers: i) BC services to major domestic banks, ii) assisted e-services, and iii) e-governance services that deliver essential public utility services, social welfare schemes, healthcare, financial services, educational support, agricultural assistance, and banking services to G2C and B2B clients. The BC business has expanded rapidly, especially after acquiring Zero Mass Pvt, increasing its touchpoints and aiding growth.
Valuation and view — Maintain ‘BUY’
BLSIN’s Q1FY25 performance exceeded our expectations, with multiple triggers poised to drive future growth. It is the only listed Indian company in global visa processing and G2C services outsourcing. It operates on an asset and capital-light model, thus ensuring strong cash generation, with minimal growth-related costs. New visa contracts and expansion in digital services across India are expected to boost BC revenue and profitability. The company has a history of acquisitions that have enhanced its offerings and market entry. The management plans to raise INR2,000cr via equity, despite sitting on a strong cash balance, for further acquisitions and to accelerate growth in the medium to long term. Despite a higher-than-expected earnings performance in Q1, we keep our FY25/FY26 estimates unchanged. We expect a robust revenue/EPS CAGR of 30%/35% over FY24–26E. We retain ‘BUY’ with a SoTP-based TP of INR518.
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