My #StockIdea is $BLS International Services Ltd
The company is into Visa Services, E-Governance Services, Consular Services & Value Added Services. Travel as a sector is still recovering from Covid-19.
Guidance given in the latest concall: Still not operating as per 2019 levels. There is still opportunity for growth in FY24. Only operating at 70-75% of pre-covid application rate. 15-20% growth in revenue expected in FY24. Opening up of China will increase volumes. Russia is still an opportunity. 30-35% of the applications come from Russia and China. Margins will start to expand from Q4 onwards. This quarter it was subdued was due to investments made in digital businesses.
- To drive growth, the company is also expanding its G2C (Government to Citizen services) and banking correspondence (BC) businesses, which are similar to asset light Visa processing and Consular (VC) businesses.
- Only 35% of the total visa market is currently outsourced and only BLS has only 12% market share, which leaves a lot of opportunity.
- Value added services could be a significant margin booster. EBITDA margins are around 15%. VAS accounts for 35-40% of the total contract value which the management expects to take up to 50-60%. Increase in prices of Value Added Services. Customers have started opting for more VAS.
- Significant contracts will be up for renewal in the next 2 years.
- For strong presence in Banking Correspondent Business, made acquisitions of Starfin and ZMPL. (Largest BC of SBI)
- Still at 70% application levels of 2019. Russia and China
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