Asset-light Business Model and Enough Work Orders Make Up a Case for BLS International Services Limited

Asset light business model of BLS International Services Limited supports on focusing better returns and efficient capital utilization. The company is a cash accretive business, with projects entailing direct collections from its customers. Sound credit measures and global presence should act as principal growth accelerators.

About BLS International Services Limited

BLS International Services Limited is a trusted global tech-enabled services partner for governments and citizens and is categorised amongst top 3 global players. It is a preferred partner for embassies and governments across world, with impeccable reputation for setting benchmarks in domain of visa, passport, consular, e-governance, attestation, biometric, e-visa and retail services. The company is also into providing citizen services to state and provincial governments. These services are offered across Asia, Africa, Europe, South America, North America & Middle East. This is only company in its domain with listing in India on NSE, BSE, and Metropolitan Stock Exchange of India Ltd.

Growth Enablers of BLS International Services Limited

• Efficient Cost Management Should Support Long-term Growth: BLS International Services Limited saw operational revenue of ~INR150.4 crores, exhibiting 14.6% growth quarter-over-quarter and decline of 26.4% on year-over-year in 3Q21. This decline was principally led by fall in visa processing services business. Fall in revenue impacted the company’s gross profit and EBITDA, but it has realigned expenses in line with business operations, minimizing decline in margins even though there was a revenue decline. The company started accepting appointments for visa applications for Embassy of Brazil in China from Dec 7, 2020. Five-year exclusive contract from embassy makes it necessary for the company to operate 15 centers across China. The company should be able to process 4,00,000 applications during this contract. In year to Mar 31, 2022, the company’s total income came in at INR86,483.87 lakhs, exhibiting a rise from INR49,703.45 lakhs from Mar 31, 2021.  

• Competitive Strengths Should Enable Sound Growth: The company’s agile, secure and highly scalable systems and processes should lend some support to business success. It ensures about data security through personal and cloud-based platforms. BLS International Services Limited has a strong global presence, with the company having branches in 62 countries and total 2325 centers globally in FY20. It should enable the company maintain dominant position in industry and should also result in capitalizing on growing business opportunities. The company has an asset light, high FCF business model. The company’s capital utilization mechanism focuses on using funds only for contract execution. Its citizen service offices are being operated by BLS and developed by government, which ensures optimization of costs.

• Focus on Long-term Growth Objectives: Through leveraging domain expertise, there are plans to continue focus on offering tech-enabled citizen services for governments and diplomatic missions worldwide. The company targets international market for outsourced citizen and front-end services. There are plans to take up government projects in India to accelerate future growth. BLS International Services Limited focuses on deepening presence through offering more services and improving wallet share. The company plans to enter new geographies so that emerging opportunities can be exploited. To track rapid digitization, the company focuses on leveraging advanced technology and its expertise to develop robust, agile and cutting-edge processes, enabling penetration and improved service experience. BLS International Services Limited plans to eye projects entailing direct collection from customers, eliminating dependency on government revenues and receivable cycles. Focus on asset light business model should be maintained with target of minimum capex for new projects, ensuring balance sheet strength.

• Capitalising on Sectoral Opportunities: The company plans to capitalize on global opportunities as most services being offered by governments to consumers are semi-automated, leading to low penetration of cutting-edge technologies. This results in slow and inefficient delivery. Outsourcing to specialized partner should result in reducing delivery time, increasing efficiency and customer delight. This enhances image of government and national brand, enabling win-win proposition for government both from cost font and service quality front. Plans are there to capitalise on domestic opportunities and there are number of initiatives by Indian government providing attractive opportunities in e-service domain. Government leverages solutions and services from specialist service providers, enabling them to realize vision of Digital India. After success of Punjab citizen services project and Starfin, BLS International Services Limited has seen new avenues of growth open up. While other states plan to replicate Punjab model to enable greater efficiency in government processes, the company should be able to reduce delivery times and enhance productivity. Global citizen services space remains yet to be explored. In absence of large-scale organized player, the company should be able to deepen its reach in this opportune field.  

• Increased Global Presence and Technology Should Lend Growth: BLS International Services Limited is preferred customer as a result of its financial position, strong technical infrastructure and its ability to give maximum data security with help of personal and cloud-based platforms. Its agile, secure and scalable systems and processes should continue to stem business success. With expansion of its global presence, the company is being counted as a big player in visa processing & tech-enabled services. BLS International Services Limited increased its market share in outsourcing visa applications as it got an exclusive contract from Spain government and India mission. Apart from contract from Punjab government, wins from Canada & Egypt government should result in improved contribution from tech-enabled services vertical.
• Strong Financial Risk Profile- A Silver Lining: The company’s established market position should continue to lend support. To successfully overcome challenges and reduce impact on financials, the company has optimized costs and rationalized rent and operational expenses. It has strong cash and healthy bank balance of ~INR240 crores and it should be able to address business requirements with sufficient cash flow. Asset light business model stems better returns and enables sound capital utilization. Besides, the company’s projects entail direct collections from customers, which makes it a cash accretive business. Sound credit metrics should help the company achieve reasonable growth.

• Industry Overview: Each and every industry and government face digital disruption across globe. Goal of government to citizen services is to offer one-stop, online access to information & services to citizens, enabling them to find and access what they need. Presently, services provided by government are semi-automated, having a low penetration of cutting-edge technologies. This led to increased demand for outsourcing to specialized partner, reducing delivery time. Government to citizen services market is developing at a rapid pace because of increased use of data, increased business collaborations and government regulations.

• Improved and Sustained Market Presence: The company’s contract with Spanish mission allows it manage 122 citizen and consular service centres in and across 47 countries. It has scaled its presence in Russia and China, with establishment of 28 centres in Russia and 15 in China on behalf of Spanish mission. The company started Vietnam visa application centre in Turkey, Brazil Visa application centre in Lebanon. Apart from this, it has started Morocco Visa application centre in India.

Conclusion

BLS International Services Limited has compounded its revenue at ~11.7% and its EBITDA at ~22.8% over 5 years. FY20 was a dynamic year for the company and it continued to strengthen focus on customer experience, technological investments and portfolio of offerings. These measures play pivotal roles to sustain market position as leading visa processing and tech enabled government to citizen services company.

The company’s performance in FY21 exhibited strength of its agile business model and ability to relentlessly outpace expectations having extra-ordinary quality services. Revenue from operations were INR478 crores against INR786 crores in previous year. The company recorded EBITDA of INR40 crores and PAT of INR50 crores. The company generated positive cashflows throughout FY21. BLS International Limited is still a debt-free company, and maintains healthy liquidity.

Over 1 year to May 27, 2022, its stock price saw an increase of ~256.9%. This strong growth in stock price principally stemmed from improvement in operational revenue and steps taken to manage margins. An investor who would have invested INR1,00,000 on May 31, 2021, would have seen capital grow to ~INR3,56,882.8 on May 27, 2022. Since economic activities picked up and restrictions were removed, the company’s stock price delivered strong returns.

Strong business model and systematic approach to improve revenues with help of diversified verticals should enable the company to optimise costs and result in efficient capital utilisation. With enough work orders in its pipeline, both in domestic and international market, the company should capitalise on emerging opportunities and grow presence in uncharted territories. Collectively, these factors should result in growth in its stock price. 

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