BLS International

BLS Management Meeting (By Edelweiss)/Interview (by CNBC TV-18)

• 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)
• BLS currently operates a high free-cash-generating model in which service fees are collected upfront (in its Visa processing as well as Digital Services). Furthermore, it uses a lease model for the majority of the centres from which it operates, resulting in lower capex requirements. BLS has no debt and has consistently generated positive cash flow from operations over the last five years. It reported a cash balance of INR 340 crore on September 22. Better operating results and improved working capital led to a cumulative FCF of INR 468cr from FY17 to FY22 (i.e. 7% of current market cap). We expect faster EPS growth, driven by a greater contribution from the Digital services segment, business normalisation following CoVID, and Visa & Consular Services segment.
• Still at 70% application levels of 2019. Russia and China opening up now.
• Recent Contract with Poland Govt. Expecting to process 20000 applications annually.
• Revenue per application has also gone up by 35-40%. Has a mix up of pricing increase and customer demand increase.