BLS International Services Limited (BLS.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to BLS International Services Limited Q1 FY '26 Earnings Call hosted by AMBIT Capital Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Mohit Chandani from AMBIT Capital. Thank you, and over to you.

Thank you, Yashasvi. Good afternoon. And on behalf of AMBIT Capital, I thank the management of BLS International Services Limited for the opportunity to host your Q1 FY '26 earnings conference call. We have the following members of management with us today: Mr. Nikhil Gupta, Managing Director; Mr. Shikhar Aggarwal, Joint Managing Director; Mr. Amit Sudhakar, Chief Financial Officer; Mr. Lokanath Panda, COO, Digital Business; and Mr. Gaurav Chugh, Head of Investor Relations. I will now hand over the call to Mr. Gaurav Chugh to walk us through the initial comments. Thank you all, and over to you, sir.

Thank you, Mohit. Good afternoon, everyone. Thank you for taking time out to join this call today. This is to remind you that this discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties and other factors. It may be viewed in conjunction with our businesses that could cause future results, performance or achievements to differ significantly from what is expressed or implied by such forward-looking statements. I would like to hand over the call to Mr. Shikhar Aggarwal for his opening remarks, post which Mr. Amit Sudhakar will discuss the financial performance of the company, and we'll then open the floor for an interactive Q Q&A session. Thank you, and over to you, Shikhar.

Good evening, everyone. Thank you for joining us for the Q1 FY '26 earnings call of BLS International Services Limited. This year holds special significance for us as we mark our 20th anniversary, a remarkable milestone that speaks of our journey of resilience, innovation, unwavering commitment to excellence over the last 2 decades. Before we dive into our performance, I want to take a moment to sincerely thank our stakeholders, partners and team members. Your trust and support have been central to shaping BLS into a globally trusted brand it is today. Our journey has been defined by sustainable growth, adaptability to changing markets and a deep-rooted customer-centric approach. I am delighted to share that we have commenced FY '26 on a strong note. This quarter's performance reflects the strength of our operating model and the impact of our strategic execution. We have yet again achieved highest ever quarterly financials. Our consolidated revenue reached INR 710 crores, marking an impressive year-on-year growth of 44% over the last year's corresponding quarterly revenue of INR 493 crores. The growth was led by the existing business as well as the consolidation of our acquired business, iDATA, Citizenship Invest and Aadifidelis Solutions during the previous financial year. Our EBITDA grew by 53% to INR 204 crores from INR 133 crores in Q1 FY '25. EBITDA margin also expanded by 171 basis points to 28.7%. Our PAT stood at INR 181 crores, witnessing a growth of 50% over Q1 FY '25. Our visa and consular business continue to drive our company's long-term growth ambitions. This quarter saw strong traction, aided by surge in global travel and increased integration of digital and tech-led solutions. The segment delivered a revenue growth of 11% year-on-year to INR 461 crores and net revenue growth of 60% year-on-year to INR 360 crores. The growth was primarily driven by change in our business model from partner and to self-managed across many locations as well as due to consolidation of iDATA. We recorded an EBITDA margin of 40.4% in the segment as compared to 29.3% in Q1 FY '25, supported by the company's strong focus on cost efficiencies. We have continued to deliver robust growth in number of applications as we processed 11.4 lakh applications during the quarter, representing a year-on-year growth of 33.6%. The global visa outsourcing market continues to present a significant opportunity projected to grow at 14% CAGR and expected to reach USD 8.2 billion by 2028, a trend we are well positioned to capitalize on. Now moving forward to the Digital Service business. Revenue in the segment surged to 218% year-on-year to INR 250 crores with an EBITDA at INR 18 crores. Growth here was primarily driven by the consolidation of Aadifidelis as well as growth in our BC business. During the quarter, our stepdown subsidiary, Zero Mass also signed definitive agreement to acquire CSPs of SBI and HDFC Bank from Sub-K Impact Solutions. This strategic acquisition will mark a significant step in the company's commitment to expand financial inclusion and enhance last mile banking delivery across India. Our BC and BS business continue to drive financial inclusion. We have onboarded over 1,000 -- 10,000 retailers, entered into strategic partnership with Bajaj Finserv HDFC Bank, along with micro ATM CSP rollout in Odisha and further. Beyond banking, we have also expanded our digital footprint with a new project in Chhattisgarh for digitizing sub registrar offices, streamlining land record registrations and launching Aadhaar enrollment centers in Rajasthan and partnering with Delhivery for nationalized COVID services. We continue to benefit from successful integration of recent acquisitions such as iDATA, CI and Aadifidelis. These integrations have expanded our service capabilities, improve operational efficiency and strengthen our presence and market share in high-growth markets. As we look forward, BLS International remains well positioned to build on this momentum. We are expanding through key government partnerships and diversifying our offerings into areas such as residency and entering services. With a strong leadership team, a healthy pipeline of opportunities and increasing adoption of innovation technologies, we are confident in our ability to create sustainable long-term value. I now invite our CFO, Mr. Amit Sudhakar to walk you through the financial highlights.

Thank you, Shikhar, and a warm welcome to all the participants. I'm pleased to present the consolidated financial results for the first quarter of financial year 2026 ended 30th June 2025. We have started the year on a strong footing. Consolidated revenue for the quarter stood at INR 710 crores, reflecting a robust 44% year-on-year growth compared to INR 493 crores in Q1 FY '25. This growth was driven by continued strength in our core operations as well as full quarter impact of our recent acquisitions of iDATA, Citizenship Invest, Aadifidelis Solutions, which were consolidated during FY '25. EBITDA for the quarter grew by 53% Y-o-Y to INR 204 crores with the EBITDA margin expanding by 171 basis points to 28.7%. This margin improvement is a result of our operational leverage, continued focus on cost optimization, the transition of self-managed centers and higher per transaction realization. Profit after tax rose by 50% Y-o-Y to INR 181 crores, reflecting improved performance across both our core business segments. Now moving to Visa and Consular Services. The Visa Counter segment continued to deliver strong results with revenue increased by 11% Y-o-Y to INR 461 crores. The EBITDA margin in this segment improved significantly to 53.4%, up from 23.3% in Q1 FY '25. The strong performance was primarily driven by enhanced cost efficiencies, a higher proportion of self-managed centers and consolidation of iDATA high-margin operations. Application volumes grew by 34%, reached 114, while net revenue per application grew by 19% Y-o-Y to INR 3,167 per application. Digital segment recorded an exceptional growth with revenue increased by 218% Y-o-Y to INR 250 crores, largely due to integration of our Aadifidelis Solutions Private Limited from November 2024. EBITDA in the digital business rose by 54% Y-o-Y to INR 18 crores, highlighting the growing momentum of our digital service portfolio and the operational progress made during the quarter. Balance sheet and outlook. Our balance sheet remains quite strong. Despite investment over INR 1,000 crores in various strategic acquisitions during the previous financial year, we continue to maintain a net cash position of INR 1,126 crores as on 30th June 2025. compared to INR 928 crores of net cash as of 31st March 2025. Our Q1 performance reflects the disciplined execution of our growth strategy with a clear focus on scalability, margin expansion and diversification across geographies and service lines. We remain confident in our trajectory and committed to deliver sustained value to all our stakeholders. With that, now I invite the moderator to open the floor for questions.

[Operator Instructions] Thank you. We take our first question from the line of Arpit Shah from Stallion Asset.

I just wanted to congratulate the management. This quarter is just nothing short of exceptional execution, 40% EBITDA margin in a weak quarter for the visa business. It's just like you're playing in a league of your own. If I have to just highlight the Q1 EBITDA this year in Q1 FY '26 is almost equivalent to the full year EBITDA of FY '23. That is just phenomenal execution in terms of acquisition, in terms of increasing margins, in terms of moving towards your own channels of business

One moment please. Arpit, the management line is disconnected let me just reconnect them. Please stay connected. Ladies and Gentlemen we have the management team on the call. Arpit, can you please repeat your question?

Sure. Am I audible now?

Yes.

I just wanted to congratulate the management for this quarter's performance, 40% EBITDA margins in a quarter where it was faced with a lot of macro headwinds and we've almost done like this quarter's EBITDA is almost equal to FY '23 full year EBITDA. So just glad to see such kind of execution, such kind of progress in terms of execution that the management has shown us. I had a question regarding the VFS IPO, which is probably on cards, which is going to be coming in the next couple of quarters or so. I just wanted to understand how do you stack up against VFS, which probably the valuations which are running around the street is about a multibillion dollar, something around $8 billion to $10 billion kind of an IPO. And how do we stack up against something like a VFS? And I just wanted to understand like we have seen phenomenal growth in the last couple of years. Even this quarter, it was 11 lakh applications more than 36% growth Y-o-Y in a tough macro environment. So now how do we go ahead from here? Do we sustain this kind of growth rates going ahead? Or do we now step up beyond Visa outsourcing, we now start to do better things with better margins, higher margins? What is the road map? How do we become a INR 1,000 crore PAT company, let's say, from current levels? How much time do you envisage seeing currently? And just congratulations on a phenomenal performance.

Arpit, first of all, I think better margins, we have already achieved, if you see in the visa business around 40% EBITDA margins. And on an overall basis, 28.7% consolidated basis. So I think our immediate and long-term objective is to maintain. We have reached from 35% in last quarter. And last year, we were at 30%, 29%. So we have now reached 40%. So our immediate target is to maintain that. We don't know about this competition, but definitely, more companies getting listed in the market will be good for us and more coverage. Right now, a lot of investors say that we are the only listed company in this space globally. It will be very good for the analyst community to benchmark us. What we know is that globally, I think we have achieved around 16% to 17% global market share, wherever our competition, I feel that we are the second largest company globally in this business. And as you have seen now, if you compare the numbers 5 years back, our EBITDA -- our revenue has grown 5x. Our EBITDA has grown 15x. We as a company, we know execution, and that is what we are focused on keeping our heads down. We are focused on execution. So definitely, we feel that whatever numbers we have achieved, we can maintain. And what our guidance or what we are telling people is that now with the increased base also, next 3, 4 years, we have continued to grow 20% to 25% in terms of profitability, revenue, et cetera. And there are multiple opportunities in terms of new tenders coming out in the visa field itself. And only as we spoke, only 50% of the global market is outsourced. So right now, in the outsourced market, only there are multiple tenders that are coming out, some we have won, some we have deployed, some are in different stages. So as and when -- as you see, we have done 11.6 lakh applications, with 33% increase compared to similar quarter last year. So definitely, there's a big leeway for growth going forward. So definitely, whatever we have achieved, we'll maintain, and we will look forward to consolidate the market.

Got it. And if I could just speak about the seasonality, typically, whatever I see in terms of EBITDA or the PAT numbers for quarter 1, if you go for the full year, it's typically 4.5 to 5x our quarter 1 EBITDA or PAT. Should we see a similar kind of seasonality going ahead for this year? Or you think the seasonality have changed post the acquisition and where you have different kinds of countries now part weeks of seasonality? Or you think that the run rate that we used to see from quarter 1 to this full year, that number still maintains even this year?

Post COVID, post-COVID, a lot of things have changed, trend has changed. As you see, the global travel trend has changed. So definitely, there are different time lines that we see. But typically, quarter 1 is, as you know, a lot of outbound travel from India also happens during this time. So definitely, there is more. So I think quarter 3, quarter 4, probably, I don't remember exactly, is a little lesser. But yes, as you have seen in the last few years, the numbers we have received acquisition, et cetera. So globally, we are operating in multiple geographies. So definitely, there is some high season somewhere else. But quarter 1 definitely has been good for us this quarter.

Got it. 11 lakh applications, congratulations on that. We have seen a new high in number of applications. I thought we'll saturate around 1 million per quarter, but I think we just surpassed that by another 1 lakh applications. So congratulations for that. Thank you so much.

We'll take our next question from the line of Ravi Naredi from Naredi Investments.

Thank you so much for giving me opportunity. Sir, what is our plan to use INR 1,100 cash immediately any acquisition on card or any new contract you find with any country, which you like to tell today?

See, as you know that last year itself, we did upwards of INR 1,200 crore acquisition. We deployed our money in that, and that is getting consolidated. Now if you see this -- again, this is a cash flowing company. we are INR 1,100 crores plus net cash position. So definitely, we're looking at different opportunities. Right now, it's consolidating our previous opportunity acquisitions. So as and when something gets materialized, we'll definitely let you know.

But immediately, no such acquisition, no card, right?

We have an M&A team that keeps on looking. As and when something is finalized. We will definitely tell you.

Okay. Sir, you tell you acquired 100% stake in Citizenship Invest, which offers leading player in residency and citizenship. In actual, what is business model of that company?

I think we have already explained this multiple times in the past also in the last quarter results also, but I can tell you again that this is a company that is into long-term visas. We are currently into short-term and business visas. This company facilitates residency and passports for different countries around the world.

Okay. And now you see more growth in digital service business or visa services we see in next time, next some quarters.

I did not understand your question.

From where we got more growth in digital service or visa service?

You have seen the numbers that on a consol level, on a revenue basis, we did 200% plus growth on the digital service business. But EBITDA, if you see combined, we did 55% growth in EBITDA. So both the business, we have seen growth.

We'll take our next question from the line of Vansh Solanki from RSP Ventures.

My questions are on the margin side. If we see the margins of the Visa and Consumer segment and Digital segment separately on a Q-o-Q basis, then the Visa are around 500 bps plus margin. So I want to understand that in Q1, the management converted more partnership model into cellphone model during the Q1. And also digital services, the margin -- EBITDA margin declined ACL is still a lower margin subsidiary, but it has impact on quarter 4. So why the margin decline in Q1?

So you are correct. In the Visa business, we have converted a few more businesses where the partnership model was changed to self-managed business, which helped us in improvement of EBITDA margin. Whereas in the digital business, the major portion of the turnover has come from the acquisition we did of Aadifidelis, where the margins are about 4% EBITDA. So the average has come down because of that. Growth has increased, but the average has come down of the digital business.

But digital business is already ASPL is already considered fully on quarter 4, I guess. Quarter 4. So margin is in Q1?

Yes, because in the quarter 4, they get the incentives. if you understand the business of Aadifidelis, they are into loan distribution. And for the whole year, their performance on the basis of that, they get incentives. So the margins were higher during the Q4.

Okay. And I just want to understand that how many percent of stores in the connection points are in a partnership model as of now and self-owned model. Can you just give a bifurcation both?

So mostly all have now been converted into our own self-managed businesses. The last major one was China, which was done in the Q1.

So if I understand correctly, then EBITDA margin will be the same in the Q1. Yes, it will not rise more. Am I right?

Yes, that is what our expectation...

Okay. And just one last bookkeeping question. Can you just give me the revenue contribution for ASPL, iDATA and citizenship business for Q1 and also EBITDA margin, if possible?

So approximately around Aadifidelisis about INR 150 crores. iDATA about INR 72 crores or so. Citizenship was about INR 11 crores in this.

Okay. And EBITDA margin, ASPL, you told 4% approx and about others?

Yes. That's right.

Others for citizenship and ID?

They are more or less as per our visa business, around 30-plus 40%.

We'll take our next question from the line of Amit Chandra from HDFC Securities.

So my first question is on the strong Y-o-Y growth that we have seen. If you can break down that into what would be organic and what would be inorganic in that. So 44% Y-o-Y, if you can break that down into organic and inorganic growth? And also secondly, the margin expansion -- the margin expansion that we have seen is also a function of we acquiring the higher-margin business. So the EBITDA margin also, if you can break down. And also if you can explain the fundamental reason behind what led to the margin expansion specifically by shifting into the self-own model versus the partnership model? And what are the advantages of self-owned versus partnership. And -- but in terms of the cellphone model, what kind of assets that we own, how many offices we have across which are owned and which are rented, if you can give some clarification on that?

So Amit, if you see on Y-o-Y basis, quarter-to-quarter, Q1 versus Q1, the growth from new acquisitions have been in revenue about 35%, which has contributed, and that has also contributed to about 30% in our EBITDA margins, PBT, if you look at that. And as you said, the advantage of moving from partnership to self-managed, the biggest advantage on the same was the margin which was kept by the partner has now been coming in our own books. And for that, we have either taken over the existing establishment of the partner or we have opened our own offices in those countries. And nothing has been on a fixed -- we have not purchased any assets as a property. So it is all the furniture and the office interiors and everything. Those have been acquired.

Okay. So how many offices you must have acquired or taken over in that process? And what -- so if you just can explain the commercials, how it worked earlier versus now because the margin expansion because of that has been pretty strong, and we are not able to understand exactly how these commercials have been working there. So we have done a very good job here. So just for clarification, if you can understand that.

So earlier, what -- when it was a partnership model, we -- the revenue -- the direct cost of the logistics as well as maintaining the offices and other was paid to the partner, which was going in our direct cost of services, wherein now that has come out and the maintenance of the rentals of the place and the employee cost is getting directly debited to our respective heads of expense now. So if you see over the last year or so, the cost of services are coming down as a percentage of the revenue. And you will see the cost has gone up in the employee cost and the other expenses, that is the administrative.

Okay. So you are saying most of the office running cost is now like more like an OpEx model, right?

That s right.

Okay. And how many offices we have in rental or own model, if you can explain across countries?

So practically, 99% of our -- all offices are -- 100% are basically on rent on a rental basis only.

Okay. Understood. And also in terms of the contracts that we have currently, both Indian and global, what would be the pipeline in terms of the renewal pipeline? What are the major contracts which are coming up for renewal? If you can have some data on that.

Yes. Amit, I think you've explained in the past in the last 1 year, 90% of our contracts have been renewed. -- next 2, 3 years, some of those will come up, but we have a clear visibility on the next 4, 5 years, 6, 7 years of our revenue. Even we explained we won some contracts with the U.S. government also last year that are for 10 years. So we have a clear visibility. We have a very strong position as a company as of now.

Okay. Understood. And Shikhar, you mentioned that 50% of the total contracts are now outsourced. I think this number was very less 3, 4 years back. So this outsourcing trend has been on a rise. So globally, who are the other players who have got benefited from that apart from you or the -- it still remains to a very market, which is dominated by a few players.

Sorry. So what is your question?

So because the trend has been major outsourcing has been done because I think this number was 10%, 20% a few years back, which has gone up to 50% in terms of outsourcing. So we are the major beneficiaries of that or because the market has expanded. So some other players or the competition has also come up or it continues to be only BFS and BLS kind of.

Yes. For us only, honestly, it's been 15 years. It took us a long time to come here. new players. I welcome them to enter the industry. So first of all, I think the -- as you know, the qualification criteria and all is pretty strict, and we are dealing with monopolistic players. And see, both the things have happened. We have won -- most of the growth that has come in is also -- is mostly from the contracts that we have won from the competition. But also market has expanded a bit. Newer client governments have also outsourced. Newer services have been outsourced, newer geographies have been outsourced. So it is a mix. And every year, the business is also growing 14% as you know, year-on-year, there is a CAGR growth in terms of travel. So a lot of factors have led to this growth where we are. And as I've explained to you, we are working on 10 different factors at any given point of time to achieve growth and profitability of the company.

And Sikhar, in the Shenzhen area, how many contracts we have on -- in terms of the global contracts and how many we are like bidding as of now, if you can give some...

See, we are working currently with more than 40 client governments in more than 70 countries. And there are multiple Chen government, I need to count how many exact number we have, but we are as we are only for Italy, Germany, Spain, Czech, Portugal, Poland, Hungary. So we are working for multiple -- many more governments right in the call right now. But we have, in the last few years, managed to penetrate a lot of the [ Schengen ] government. We're working for the U.S. government, Indian government, Philippine government, Brazil government. That is how you see we have achieved all this growth has come from all these factors. So -- and the next few years, many countries are coming out of the tenders, new governments are coming out with contracts. So we are bidding for it actively. And we feel now we have a presence globally, good team on the ground. And we feel that if we can maintain our execution, then definitely, we can win more business.

Queue please as we have other participants waiting for their turn?