BLS International Services Ltd. (BLS) is a specialist service provider for outsourcing of visa, passport, consular, attestation and citizen services to the government and diplomatic missions globally since 2005. It is globally the second largest visa processing player. From pre-travel information processes, data processing and biometrics capture of applicants to acceptance of crucial travel documents, BLS plays the catalyst in making travelling easy and effortless. The company manages all administrative and on-judgmental tasks related to the entire life cycle of a visa application process.
BLS has operations in more than 58 countries and processes visas for countries such as Spain, UAE, Russia and China. It provides services through 178 offices worldwide. BLS is also an authorised service provider for attestation of documents by the Ministry of External Affairs, India. The company has processed 18mn applications over the last 12 years and currently processes around three million applications annually.
Globally, BLS International serves clients’ governments via visa and passport application centers across Asia, Africa, Europe, South America, North America and the Middle East for over 29 countries. The company is a part of the four decades old BLS Group with a global presence and diversified range of services in polymers and petrochemicals, education, electronics, asset management, visa processing and management consulting.
BLS reported healthy revenue growth of 25.7 per cent and stood at Rs 635 crore with EBITDA margin expansion of 570bps to 13.0 per cent making excellent profit after tax (PAT) growth of 62 per cent in 2017. Over 2014-17, the company’s revenue and EBTIDA grew at a healthy CAGR of 40 per cent and 52 per cent, respectively.
Niche services provider
The visa application outsourcing market is niche and young, with few specialised players; in very short run the market has witnessed significant change. Largely, the visa applications are processed in-house, with only 30 per cent being outsourced. The rise in global travel outsourcing is going to continue and will provide huge opportunities for companies such as BLS.
The main competitor of BLS is VFS Global, which is leading with more than 50 per cent market share. Other players are TLS Contact and Cox & Kings Global Services; these players are largely focused on the domestic market and have not aggressively bid for global tenders.
Punjab e-Governance project: gathering steam
In March’ 16, BLS won a five-year e-Governance project in Punjab for providing 223 citizen services through 2,147 centres or ‘Seva Kendras’ along with manpower and IT infrastructure. BLS aims to earn Rs 85 each from 29 million applications, at an estimated EBITDA margin of 27 per cent in the current financial year 2018. Total revenue scope is Rs 1,490 crore over five-years.
The Punjab e-governance project is a step towards harnessing the tremendous opportunity offered by the Digital India campaign. This is a first of its kind project in India, and several other states such as Haryana, Delhi and Orissa are looking to replicate this model.
Spanish and Afghanistan Embassy new contracts
Spain is an important travel destination; the country was declared the third most travelled country globally by number of arrivals in 2015. In Dec’16, BLS won a Spanish visa processing contract of worth Rs 1,300 crore (euro 175mn) spread over five years.
BLS is the first Indian company to bag a Schengen visa contract and expects to process two million Spanish visas annually, at €18.5 per visa (Rs 1,330) for travelers from 48 countries. The five major foreign mission tenders for 8.6 million visas per annum are likely to be bided in 2018-19 period.
The Spanish visa processing contract is a huge opportunity for BLS and success of this will support the company to gain other upcoming European contracts.
In June-17, BLS won a contract from the Embassy of Afghanistan in U.A.E. This contract is related to digitisation of existing passports of Afghanistan citizens in five gulf countries, including UAE, Kuwait, Oman, Bahrain and Qatar.
The company will open eight visa application centres to support the Embassy of Afghanistan in the passport upgradation process and expects 200,000 to 300,000 applications, and will charge a facilitation fee of Rs 800-900 per passport. This win from Afghanistan Embassy aids growth for BLS.
Stance and valuations
Five major foreign mission tenders for 8.6 million visas per annum are likely to be up for bidding in the period 2018-19. After the successful win for Spanish Visa processing contract, the company is well poised to participate and win such large contracts. The company has won lucrative e-Governance five-year contract in the Indian state of Punjab. Many more states are looking to implement such e-governance projects.
Over 2017-19 period, revenue and PAT are expected to grow at a CAGR of 36 per cent and 45 per cent, respectively. This is driven by the Spanish visa contract and Punjab e-governance project. The fresh contract wins in both segments of the business are likely to act as triggers for the stock.
Niche focus, strong order execution, asset-light business model and sustainable growth puts company in to strong positive stance and resulted in a healthy return on equity (RoE) of 35 per cent in 2017.
Risk and concerns
The key risk for BLS is major economic slowdown which can lead to reduction in global travel and execution risk for Punjab e-governance project. Another concern for the company is the increased adoption of e-visas globally.