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

Ladies and gentlemen, good day, and welcome to the BLS International Services Limited Q2 FY '26 Earnings Conference Call, hosted by AMBIT Capital. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Moez Chandani from AMBIT Capital. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone. On behalf of AMBIT Capital, I would like to welcome you all to the Q2 FY '26 Earnings Call for BLS International Services Limited. Joining us from the management today, we have Mr. Nikhil Gupta, Managing Director; Mr. Shikhar Aggarwal, Joint Managing Director; Mr. Amit Sudhakar, Chief Financial Officer; Mr. Lokanath Panda, COO, Digital Business; Mr. Gaurav Chugh, Head Investor Relations. I thank the management for the opportunity to host the earnings call. We will now begin with opening remarks from Mr. Gaurav Chugh, post which the forum will be open for an interactive question-and-answer session. Thank you, and over to you, Gaurav.

Thank you, Moez. Good afternoon, everyone. Thank you for taking time out to join this call. 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 will then open the floor for a Q&A session. Over to you, Shikhar.

Good afternoon, everyone, and thank you for joining us for the BLS Q2 and H1 FY '26 Earnings Call. We trust that you have had an opportunity to review the results, press release and investor presentation uploaded on the stock exchanges as well as on our website. We are pleased to share that the company has delivered a strong performance during the quarter, reflecting robust operational momentum across our key business verticals. On a consolidated basis, revenue for the second quarter increased 49% year-on-year, while EBITDA grew by 30%. On a sequential basis, we have maintained our EBITDA margins at around 29% in the second quarter, and we feel the margins have now stabilized at these levels. Profit after tax for the quarter rose by 27%. The results provided a solid platform for the sustained growth in the remainder of the fiscal year. Our visa and consular service business continued to strengthen its global footprint and reinforce our leadership in the outsourced visa processing industry. During the quarter, we secured a 3-year mandate from the MEA Government of India to operate India Visa application centers across key cities in China, including Beijing, Shanghai and Guangzhou. With improving dynamic relationships between India and China, we anticipate a meaningful increase in visa volumes going forward. In addition, we were awarded a contract by the government of Cyprus to establish a visa application center in Kazakhstan, further enhancing our international presence. Volumes visa increased by 12% during quarter 2 FY '26, rising to 11.3 lakh applications compared to 10.1 lakh applications in Q2 FY '25. Net revenue per application improved by 12% from INR 2,883 in Q2 FY '25 to INR 3,222 in Q2 FY '26, supported by enhanced service offering and favorable business mix. Our subsidiary, iDATA continued its strong growth momentum, processing around 1.8 lakh applications during the quarter, demonstrating sustained demand and operational efficiency. The successful integration of iDATA and new contracts position us well for the enhanced expansion. In a major milestone, we also won a prestigious and large-scale contract valued at around INR 2,000 crores from the Aadhaar Authority of India to establish district-level Aadhaar Seva Kendra. The long-term agreement reinforces our proven capability in executing large-scale e-governance and public service delivery projects, while strengthening our role in India's digital IP ecosystem. This contract will be executed over the period of 6 years. Now moving on to digital service business. Revenue from digital services increased significantly from INR 77 crores in Q2 FY '25 to INR 278 crores in Q2 FY '26, registering a remarkable growth of around 260% year-on-year. This is primarily due to the consolidation of Aadifidelis Solutions, which was acquired in November 2024. During the quarter, our digital service business continued to strengthen its partner ecosystem through strategic collaborations aimed at expanding service offerings and enhanced customer reach. We entered into key partnerships with Aditya Birla Capital and Piramal Finance in July 2025, followed by many other companies. In the same month, we also partnered with Grameen Foundation for Social Intact. The partnership collectively reinforce our position as an integral and diversified digital service platform. We continue to expand our digital service network, which now exceeds around 147,000 touch points, underscoring our commitment to enabling financial inclusion and improving digital services across India. In our BC business, we processed around 3.5 crore transactions during the quarter with gross transactional value crossing INR 27,300 crores. We further strengthened our distribution network by adding more than 15,000 channel service partners, taking the total to over 45,400 BCs as of September 30. Our partners generated loan leads approximately INR 8,600 crores for financial institutions during the quarter, compared to INR 1,400 crores in Q2 FY '25, reflecting deeper market penetration and enhanced service delivery. Now I'll turn over the call to Mr. Amit Sudhakar, our CFO, for further updates on our financial performance. Thank you.

Thank you, Shikhar. Good afternoon, everyone. I'm pleased to share our consolidated financial results for the second quarter and first half ended September 30, 2025. For Q2 FY '26, our revenue reached INR 737 crores, representing a strong 49% year-on-year growth from INR 495 crores in Q2 FY '25. This growth was driven by a steady increase in application volumes and the consolidation of Citizenship Invest and Aadifidelis, which added further momentum. Our EBITDA for the quarter rose INR 213 crores compared to INR 164 crores last year, recording a growth of almost 30%. The EBITDA margin stood at 28.9% margins have now largely stabilized at this level as the key benefit from shifting to self-operated center model and integrating our acquisition businesses have been realized. Profit before tax for the quarter stood at INR 203 crores, up 24% from INR 164 crores in the same quarter last year. Profit after tax increased by 27% to INR 186 crores compared to INR 146 crores a year ago. It's worth noting that this strong growth came despite lower other income during the Q2 FY '26. The earnings per share for the quarter were INR 4.25 compared to INR 3.36 per share in Q2 FY '25. Now looking at the half year performance, the revenue for H1 FY '26 stood at INR 1,447 crores versus INR 988 crores last year, up by 46%. EBITDA rose to INR 417 crores from INR 297 crores, a growth of 40% with margin steady at 29%. Profit after tax for the half year was INR 367 crores compared to INR 267 crores last year, showing a 38% increase. Coming to segmental highlights. In Q2 FY '26, the Visa and Consular Services segment recorded a revenue of INR 457 crores, a 10% growth over INR 418 crores last year. EBITDA for the segment rose by 26% to INR 192 crores with a margin of 42%, an improvement of 549 basis points from 36.4% margin last year. Visa application volumes also grew 12% from 10.1 lakh to 11.3 lakh applications. This improvement in profitability was driven by higher volumes, cost optimization and the strategic shift to a self-run model across key geographies. The first half Visa Consular services revenue grew by 11% to INR 919 crores compared to INR 832 crores last year. EBITDA for the segment rose sharply by 38% to INR 378 crores with a margin improving to 41% from 33% last year, reflecting our focus on efficiency and profitability. In the Digital Business segment, revenue reached INR 278 crores in Q2 FY '26, up from INR 77 crores a year ago. EBITDA for the quarter was INR 21 crores, a 72% rise with a margin at 7.4%. This growth was primarily driven by the consolidation of Aadifidelis. For the first half, the Digital Business segment revenue reached INR 528 crores compared to INR 156 crores in H1 FY '25. The EBITDA for H1 FY '26 was INR 39 crores as compared to INR 24 crores in corresponding period of previous financial year. The company continues to maintain a strong cash flow and a healthy balance sheet with net cash of INR 1,306 crores as on September 30, 2025, compared to INR 928 crores as on 31, March 2025. With that, I will now hand over to the moderator to open the floor for questions. Thank you.

[Operator Instructions]. The first question comes from the line of Shrenik Mehta from [Indoapps] Wealth.

I have 2 questions. One, on the digital service, we've seen a sharp drop in terms of the EBITDA. What is the vision for the EBITDA over the next few quarters? How do you see that evolving?

No. See, if you see the digital service business, our EBITDA margin has dropped primarily because of the acquisition of new company, Aadifidelis, that we acquired in November 2024. The margin is 3% on the revenue and the increased revenue. If you see on an overall basis, our EBITDA has grown to INR 20 crores from INR 12 crores in previous year last quarter. Basically, our margin has definitely -- percentage has gone down, as we said, explained also at the time of acquisition of Aadifidelis, since it's a high revenue, less EBITDA margin company. Our immediate objective is to maintain the EBITDA margin, but overall, if you see both our revenue and profitability has gone up.

You believe the margin would remain at 7% going forward as well?

No, I mean, in all of our business, our objective is to grow the margin, but right now, as the base has really increased of the company, our objective is to stabilize the margin. Going forward, as we introduce more value-added services, definitely, there is scope for improvement.

My second question was about the hotel acquisition. I really can't see how e-visa company or a digital service company can say that this is strategic or this is something which is a part of the diversification. What was the real trigger behind the acquisition? What do you see the hospitality segment evolving as far as the BLS International is concerned?

See, our first of all, long-term objective is to be asset-light player. As you know, we want to be brand name owner, as we are in the industry wherein we are in touch with a lot of travel agents across the world, where the people who are applying for tourist visa, etc., they continue to demand for different kind of services, which is airline, hotels, etc., booking from us, so we thought that this would -- we did a very small investment, if you see from our cash reserves that we have to understand this, which itself gives us a 10% to 12% return on our investment. Our objective is that once we learn, our objective is not to invest, but to inquire the expertise so we can run from our own brand name. Our objective is to run an asset-light model as in the visa business. That was the strategy because our customers are the same. We are globally in touch with all the travel agent community customers who are demanding different type of services. That was the reasoning behind getting into that.

Tomorrow, if the customers are thinking about airline, we could also do something in the airline sector?

See, that obviously is a multibillion-dollar business, and we don't have the bandwidth to invest in that. As I said, this was that one investment to understand how the businesses are. Then going forward, our objective is to be in the asset-light business.

The next question comes from the line of Krishnam Saraf from Samriddhi Finserve Family Office.

I just have one question on the top line. This INR 736 crores as of Q2, what would be that number, if we exclude the acquisition, Citizenship and Aadifidelis?

Amit?

These 2 businesses had contributed around INR 200 crores in the revenue, which is about on the top line around 20%, 25%.

Excluding that, it's around INR 536 crores versus INR 495 crores of Q2 of last year?

That's right. On the PBT, it is about 5%, 6% only because Aadifidelis, as Shikhar said, the margins are about 2%, 2.5%, 3% only.

The second question was on the MEA ban that was issued. I'm a bit confused around that. A few days after the ban was issued, the company also made a filing on winning a new contract from the MEA. If you could just give us some color on is the ban still effective? That is one. Second is, what was the actual cause of the ban? If you can provide some color on that as well.

Yes. As we have -- when we had released in the exchanges, we had already announced in the interviews that we had received a notification from the MEA, saying that there were some customer complaints because of that, they are temporarily putting a ban on applying for new tenders. This tender we had already won. We are currently operating all the government contracts for the Indian government as well across the world, so there's no issue on that. As we said, we are working to resolve soon, and we are hopeful of resolving the matter soon. There should be no issue or neither any impact on our financials, etc.

The ban is still effective, if I understand correctly. Can you also elaborate on what are the -- what was the customer complaints? That would be helpful.

No, there were some SLA-driven complaints regarding waiting time, etc., that is normal when you're presenting millions of applications. We had already announced that. We are working towards resolving to resolve the matter, and we are hopeful to resolve it soon, and there is no impact on our financials or revenue.

The next question comes from the line of Vansh Solanki from RSPN Ventures.

My question is on organic growth on a Visa segment that if I see a Visa and Consular segment, the revenue, it is approx 10% only, while the management is always telling that the industry is already growing at 14%, 15%. Our Y-o-Y growth is very slow down in the last 2 quarters. Last quarter also is around 11% and this quarter is also Y-o-Y around 10% only. Even my number of applications are growing, net revenue is also growing, but why my revenue is not suiting up?

Amit, if you can explain him, our EBITDA has grown up by 30%, and you can also explain to him.

Yes. See, the growth depends on the volume of business. If you see in the last 2 quarters, the revenue -- the volumes have gone up by 10% and our revenue has also matched with that. Whereas if you look at the margins, they have improved over the -- if you look at from the last year versus now, the margins have gone up by more than 500 basis points. Improvement has been done on the rationalization and the cost.

I already understood about the EBITDA and all, but that is because of the partner acquisition, which we have done, our EBITDA and gross margin also shot up very nicely. I'm just concerned about the organic growth in the visa segment, why it is very stable even last 3 quarters, I see. In March also, it's INR 440 crores, June also, it's INR 460 crores and in September also it's INR 460 crores only.

Yes. That depends on the volume basically. See, the travel volume is growing at 10%, the revenue will go according to that.

My another question on the revenue, can you just give me the split of revenue of Citizenship India, Aadifidelis and iDATA for this quarter?

Yes. As I said, Citizenship was about INR 14.5 crores, iDATA was about INR 71.5 crores.

The last question is on the guidance of a number of applications for the full-year '26.

See, as you said that we have done 11.3 lakh applications this quarter. First quarter is high season for our second quarter is also high. Our objective is to achieve more numbers than we did last year. Right now, in terms of volume, we don't know how many volume is expected in third quarter and fourth quarter. We definitely, whatever we have achieved in the last few years, we wish to surpass that.

The next question comes from the line of Viren Sameer Deshpande from Alphapeak Investments.

It was nice to see the growth in all our businesses continue very well. We are growing this digital services business in a big way. Now, we secured a contract from the government with respect to this Aadhar Center establishment, etc., which is, I think, more than INR 2,000 crores. I think you had mentioned that this revenue will be received over a period of 6 years. Is it correct?

Correct. That is correct. We have recently won this landmark project from central government, wherein we will be establishing around 250 to 300 centers within India. It will be starting from December. Gradually, we expect the revenue to ramp up. This is the minimum level that we will achieve, but if we can do more transactions, the revenue can be even higher.

To understand this, you mentioned that suppose this work starts from January onwards, so in a quarter, suppose we establish about 10 centers, so we will -- after establishment every -- per center, we are going to get some revenue?

See, it is according to the volume that we generate. Once the project is full force started, all the centers are started and all the volumes start coming in, it takes some months for the volumes to come to the normal level, then we will get the full revenue. Definitely, it will take some months to ramp up, but as I said, from next year, the revenue will start coming.

Annually, we expect any ballpark figure, any idea annual revenue?

You can divide by 6.

About INR 350-odd crores, if I divide.

Correct. When the project is fully ramped up, we expect that revenue to come in.

Secondly, you clarified about this Ministry of External Affairs thing and the complaints and all those things. That is good. We hope to get it resolved sooner, but after that only, we secured new business from Ministry of External Affairs?

I just explained this. I'm saying same question I clarified, sir, in the previous question also.

Yes. For China, we got that, that was a good thing.

Correct.

Regarding this hotel, as you mentioned, since our business is not to be investing in big and we want to be asset-light pursue this model because our margins, etc., will be significantly dampened if we invest in these type of businesses. It will be good, we restrict our investment in this line and keep on making good margins as we are making currently?

No. As we have explained that our objective is to be in the asset-light business. We want to offer full topography of services. As we said, we were getting a lot of customer demand for different kind of services, hotels, etc., so we thought it was a good model that we can got into asset-light managed hotel business. From that, we bought one small investment we did. Learnings of that, then we can replicate across the world, so this was the objective. How we started the digital services in 2016. I think this will really add to our revenue and profitability in the coming years as well.

But we don't propose to buy any properties further?

No. As I've explained to you already.

Our margins currently about 28%, do we expect to hold on to about this 28%, 29% levels?

Correct. These are the consolidated margin. As you know, more than 40% EBITDA margins we are doing in the visa business, our immediate and long-term objective is to sustain the margins that we have achieved.

Yes, because Visa gives us a good business margin of 40%-odd. This digital services will dilute it to some extent, but we will be getting good revenues also. Together, blended margins should be in the range of 29%, 30%, which is our goal.

Correct.

The next question comes from the line of Arpit Shah from Stallion Assets.

I just wanted to understand what kind of cash we are holding right now on the Indian books?

Amit?