BLS International

BLSInternational_10July2023.pdf (1.7 MB)

bls international key takeaways from above report by jefferies—

— among top ~3 globally in visa processing/consular serv. opng in 66 countries
— building niche in govt to citizen digital services & banking correspondence biz in India
— mgmt is of the view that will benefit from opening up of int’l travel, increased visa outsourcing globally, digital India led new IT outsourcing initiatives by Indian state govts, & higher VAS biz
— rise in visa applications bode well for travel & tourism plays
— FY23, company clocked Rs15bn in revenue including ~Rs12bn (80-85%) from global visa and consular service business & ~20% from digital services (largely India focused) incl e-governance services, Banking/business correspondent services
— Globally, 80-85% of visa outsourcing business is controlled by 3 players, with dominant share held by VFS Global (at 50-55%, unlisted Co owned by Blackstone) and*~10-15% share held each by BLS* and TLS (listed in France)
— Mgmt believes that only 50% of visa processing business is outsourced (vs 22% in 2010) by embassies globally, providing runway for Industry growth
— BLS entered Int’l business in 2016, when it won global contract for visa outsourcing by Govt of Spain. Post that, Company has won contracts for different geographies for different govt like in Europe, GCC & ME, South America
— Visa processing business operates on *negative working capital
— Typically, visa contracts are exclusive contracts for 5-7 years. BLS has its tech software for appointment booking and processing applications.
— bls also offers higher margin value-added service(VAS) like SMS, courier services, mobile biometrics, premium lounge, travel insurance
— Mgmt believes that barriers to entry are high for the business with stringent criteria by embassies to participate/win the tender: ; 70% weight is on technical qualifications while only 30% weightage is on pricing
— Mgmt highlighted growth from (1) participation (and wins) from global visa outsourcing contracts worth USD1.5bn, which are under renewal in next 2 years
— (2) capitalize on opening up of travel in economies which are still lagging vs pre covid level; (3) focus on margin expansion on the back of increased VAS and economies of scale as company add new contracts; (4) M&A to strengthen the digital services businesses
— Company focuses on asset light model (visa application centers are leased) with
aspiration of 20% EBITDA margin (FY22/FY23: 13%/15%)
— Margin benefits as revenue per application increases (via higher VAS), and on back of economies of scale
— BLS is debt-free & mgmt said focus on improving cash generation as a key business performance metric
— Mgmt said, BC business has been expanding rapidly spcly after acquisition of Zero Mass Pvt Ltd; increase in touchpoints (incl via inorganic initiatives) would aid topline /margins
— Company targets services offered by govt to consumers (G2C) which are still semi-automated with low tech penetration; currently working with Punjab, UP, Kar, Raj, WB.
— Over past few years, select govts have started outsourcing some citizen services (eHospital, BHIM-UPI, online scholarships, DigiLocker, Umang app, marriage & birth certificates, etc.) to specialized players under digital India initiatives. These G2C services, coupled with Banking correspondence (last mile banking), together form Digital Services