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BLS E-Services Limited – IPO – A scalable asset light tech enabled model

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BLS E-Services Limited – IPO - A scalable asset light tech enabled model

About the Company BLS E-Services Limited:

Gurgaon, BLS E-Services Limited (BLS) incorporated in 2016 is a subsidiary of BLS International Services Ltd, which has a global presence and diversified range of services and is one of the biggest global players in visa application outsourcing. BLS provides digital and physical products and services in the G2C (Government to Citizens), B2C (Business to Customers), B2B (Business to Business) categories in semi-urban, rural, and remote areas, through its robust network and tech-enabled integrated business model. BLS operates in 3 states namely Punjab, Uttar Pradesh and West Bengal and had over 21,000 touch points to provide E-Governance services on behalf of the government as of 30th Sep’23.

Diversified segments:

BLS is a technology enabled digital service provider, offering (i) Business Correspondents services to major banks in India, (ii) Assisted E-services; and (iii) E-Governance Services at grass root levels in India.BLS has a robust network to provide access points for delivery of essential public utility services, social welfare schemes, healthcare, financial, educational, agricultural and banking services for governments (G2C) and businesses (B2B) alike in addition to a host of B2C services to citizens in urban, semi-urban, rural and remote areas through their merchants areas organized in two categories i.e. BLS Touchpoints (98,304) and BLS Stores (1016) as of Sep’23.

Consistent revenues increase with lower retention costs:

BLS charges its consumers a service fee and transactional commission for implementing the product and service offerings. Further, it charges its merchants a registration fee, renewal fee, new service activation fee, monthly portal usage fee, branding fee, training fee, wallet top up fee, certification fee, negative wallet usage fee etc other than the transaction fee for use of services available on the portal. Additionally, the company has started to earn merchant commissions and commission on assisted e-services sales. Further it earns a commission from certain state governments and PSU banks for each successful transaction, on services offered through its BC network.

Cross selling and penetration in newer states:

BLS is strengthening and integrating technology infrastructure by creating a common services portal and mobile application to increase operational efficiency, facilitate scalability and increase profitability, through this common services portal, all business segments will be inter linked and retain consumers by offering various goods and services from the same location and improve their business operations. BLS operates in 3 states namely Punjab, Uttar Pradesh and West Bengal and had over 21,000 touch points to provide E-Governance services on behalf of the government where in it is expected to increase its presence in various other states as a total of 56 mandatory services were assessed for every State & UT and 27 services were assessed for Central Ministries.

Financials in Brief:

BLS diversified revenues platforms generated from business segments are BC Business (66%), E-Governance (28%) and Assisted E services (6%) for H1FY24 providing deep synergies and providing cross-selling and up-selling opportunities to both consumers and businesses. BLS revenues from operations have grown 3.8 X to Rs.243 Crs from Rs.64.5 Crs over FY21-23 while EBITDA margins improved to 36.29% for FY23 as against 5.5% in FY21. PAT grew to Rs.22.9 Cr from Rs.3.2 Cr over the same period.

BLS E-Services Limited Our View:

BLS experienced senior management, strong parentage as its parent BLS International Services Ltd has an established track record for providing visa, passport, consular and other citizen services to state and provincial governments across various continents through its tech enabled platform and its experience would help the company to achieve superior growth in the domestic market leveraging its each business segment for multiple growth in revenues with superior improvement in margins over the next few years. BLS has also a successful track record of acquisitions enhancing its product portfolio and service capabilities to enter into complementary businesses and enter new geographies. We believe with strong tailwinds, asset light business model, and strong parentage offers strong growth, therefore we recommend a SUBSCRIBE to the issue.

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