BLS International

Delhi based company. Second largest visa processing company in the world, VFS is the largest player and the gap between VFS and BLS is huge and will take serious time to take up the leading position. Started operations nearly a decade ago and become the leading player in a short span of time. It is a cash rich business with near zero working capital requirement. The company charge customer, and hence the realizations are upfront and debtors are not there except for few credit card transactions due which get settle for over 6 to 7 days for transactions made during last week of the year. No inventory is build up in this business. No need to for debt. A single visa processing application centre takes nearly 7 to 8 months before it recover its initial investment in manpower, equipment and rent. BLS operates majority of its VISA business from dubai based subsidiary and hence as per Management the company has opportunity to save tax by not bringing this cashflows in India and using the same for deploying in incremental center that they continue to add going ahead. The company recently secured contract for Spain and five Gulf countries which will be funded using internal accruals.

Second line of business is that the company secured India’s first e-governance project from Punjab Government where they set up more than 2,000 outlets to provide Government services for a upfront fee that will be charged from the government. It is a fixed revenue contract wherein BLS will earn nearly Rs 1,500 crore over next five years. Revenue will be realised from customers for providing services like attestation, other government services and any shortfall in monthly revenue will be funded by Government to BLS, surplus revenue will be paid back to the Government. This is a first of its kind model in India. Though the centers have been set up but footfall is not yet up to the mark and as per expectation. Government is thinking of adding more services to this projects like Passport application, Pan Card application etc so as to increase the footfall. Though the project has big potential but it still has to manage the challenges of increasing the footfall. This will take time as it has a transient phase which will develop the consumer habit of paying for the services which they believe should be free. Each service has a flat fee of Rs 85 ( I do not exactly remember the figures, One can check it in the RFP). Other State Governments are also evaluating such projects and BLS being the first mover should be a big beneficiary. Punjab Project became live in November 2016 and till March, 2017 the revenues were lower than the committed amount and hence the debtors of more than Rs 50 crore stood in the balance sheet as a due from Government. This project, because of its linkage to Government interference, will have working capital requirement and hence the short term loan company took in FY17 to meet e-governance project requirement in terms of fixed cost, as the realization in case of shortfall will materialize once Government release payment.

The company was working capital free and debt free till FY16, but FY17 both appears because of e-governance project. The management maintained very clearly that for visa processing business they do not need external debt and can fund through internal accruals because of cash rich nature of the business. But for e-governance project they may need short term debt to meet working capital requirement.

The company got listed on NSE, BSE and MCX last June 2016. High promoter holding and low liquidity with very limited number of shareholders (2,897 shareholders as on June 30, 2017). They announced stock split from face value 10 to face value 1 which became effective since April 2017. The company never use to pay dividend because for the same they need to repatriate funds from dubai subsidiary to India which as per them will attract tax and hence was not inclined for such move. This was a little disappointing because the high cash generating business will never be in a position to reward shareholders. However, in June 2017, the company announced that the Board proposed a new dividend policy wherein they repatriated funds from Dubai by paying tax and declared dividend of 30%. Coming Board Meeting, scheduled for August 9, 2017, the Board is going to pass the Annual Dividend Policy of the Company. This is a good step in direction and should be appreciated.

The company look interesting and I request if someone has looked it in detail to please come forward and lets discuss the pros and cons.

What I understand is that it was a promoter managed business which is now getting professionalized.

Some concern for me:

  1. Punjab Contract, need to be monitored carefully, how the same is getting executed. If the footfalls does not turn up as per expectation, it will be a big blow to the exchequer in terms of fixed payment which needs to be paid to BLS and hence may pose a risk for subsequent project and also the realization will have impact on the balance sheet.

  2. Visa Processing Business sit in overseas subsidiary, how management is going to restructure the business to make it more transparent.

  3. Management so far is not holding concall and I expect to them to do so going forward.

  4. CFO Mukesh was appointed in December 2016 and have exited in July 2017. I understand from the Management he was ailing with serious kidney related disease and was hospitalized last one month and hence decided to exit finally. Mukesh was the first professionala CFO being appointed by the company. Prior to that though there was a CFO, but he was merely an accountant. The company found a new CFO Mr. Ajay Milhotra and is going to appoint him in the coming Board Meeting on Aug 9, 2017. However, I found that Mr. Ajay has been frequently shifting his jobs as a CFO from organisation to organization, so do not know how long he will continue his stint at BLS. His Linkedin Profile can be checked. Would like other members view on the same.

A Rs 2,000 cr market cap company with very high growth potential available at decent valuation. I expect Q1FY18 to be very good, given that this will be the first quarter, where company will report its SPAIN revenue. I hope revenue from SPAIN project in this quarter should be sufficient enough to take care of operating expenses incurred for setting these facilities. As per my sources, some big names (without taking names), have entered this scrip.

Lets discuss this in more detail:

Disclosure: I have added a small position in the stock.


I was interested in BLS when it got listed but I had few questions to the management and had written down an email to them regarding the same. Incase you are interested in the company you might probe further into them:


This email is further to my discussion with Mr. Prabhat Shrivastav,

I have certain queries regarding our company’s results posted on the NSE site and also regarding last year’s results on Ministry of Corporate Affairs(MCA) website. I currently do not hold any shares of our company but am keenly interested in the same. My queries are:

a) At a consolidated level why is our tax rate so low? From the annual results posted on NSE our PBT for FY16 is 30.9 cr and PAT is 30.8 cr and our tax payout is 10.17 l. Similarly for FY15 our PBT at consolidated level is 23.58 cr and PAT is 23.49 cr and our tax payout is 8.33 l. The tax payout at a consolidated level is same as standalone level. Why are we not paying tax on our subsidiary profits, since our subsidiaries are international (BLS international FZE and other step down subsidiaries) what is the accounting treatment?
b) Is there place where I can see our subsidiary annual statements?
c) I am attaching a copy of FY15 cash flow statement that I got from MCA website. In the cash flow statement there is a line item pertaining to Adjustment for provisions of Rs. -20,54,46,393. I would like to understand what exactly does this line item correspond to?

Anant Jain


They are not paying the tax on subsidiaries which gets consolidated in dubai subsidiaries as it is tax exempted as I explained earlier.

do you have its prospectus? I couldnt find it anywhere

SInce it was a listing from regional to national exchange…Prospectus was never filed as there is no such requirement

Found the offer document in mcx website.


Dubai is tax free zone

I am invested. The recent reports are attached.

HDFC Report:
bls_hdfc_update.pdf (603.1 KB)

ICICI Direct:

I have some open questions but would wait till the AGM which will most likely happen in September last week.

Disc: Invested.

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For FY17, on yearly basis company paid 6% tax (on PBT) in consolidated statement. Standalone tax rate is 29% which is India business. Which looks fine. This implies 4% tax on overseas business. Bulk of sales are from Dubai, Qatar and rest of GCC. Whihc is 0 tax. Russia also has very low tax rates.

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The overall tax rate will increase this year onwards as Punjab revenue will be coming in.

I found a unique way of compensating the management team from AR of FY16. Have a look at the salary and rent paid. It’s too low.

Now look at the line items below:

The security deposits paid is huge. I assume this is to for the house.

Hope I have understood it correctly. didn’t understand the need to do that.



Yeah I saw these items. What I understood by interacting with the Team.These are promoter owned premises which are being given on rent to companies. Obviously rent charged to company in each case is pretty high compared to market rate and has been a way to take money out of the system. What I understood from limited interaction and also by way of communication with several other guys at different forums, channels and calls, is that, since ages the company has been running as closely held promoter driven set up and the management is now keen to professionalize the entire set-up and is in a fray of doing away with frivolous acts so as to make the system more professional and organized and is attempting to clean up the structure by working closely with some reputed management consultants (I know the name but refraining from mentioning it here). The stakes and risks are high as it takes time for turning into a complete professional set up. What I have understood is that the company is also inclining towards setting up earnings call every quarter may be from Q1 or possibly from Q2FY18 onwards. This is definitely a risky bet. As I said it is a case of superb business model with no very clean set of management. The moat in the business is superbly strong. But the major issue is that will the pursuit of running a professional set up by the management will become a reality or not will have to be a wait and watch.

I continue to remain invested with a close watch on the scrip.

Came across this - - Clear red flag!

Shows how BLS goofed up with US contract. This is the key risk! If the Spain contract which they won 7 months back - if such thing were to happen now - the share price will fall precipitously. And BLS won Spain contract from VFS. It was VFS’s largest contract in Europe. I don’t think VFS will sit quiet.

Also another red flag is that the share is very volatile which happens for no reason.

  • On 7th August, almost 12% of the stock changed hand. This is abnormal given the 74% promoter holding. Share price fell from 193 to 175 in a flash.
  • In April, in a matter of 10 days the share slipped from 173 to 119 with no news or fundamental changes. I fail to believe if there is an operator behind all this.

High volatility and sudden incompetence driven contract break are my concerns

Not invested


I think the most obvious red flag hasn’t been discussed here. India has started to give e-Visas to more than a 100 countries. People can simply apply and pay on-line without the need for any middleman.

I run a travel company and our clients from Hong Kong had an extremely negative experience with BLS. After waiting for weeks, they were told the Visas were rejected. So we simply asked them to apply online and they got the e-Visas the next day!

This is just one of the many stories of BLS’s incompetence that I have witnessed and there must be similar stories around the world.

Why would foreigners use their service if they can simply get a hassle-free India Visa from the comfort of their home? Some people/agents of course will still use BLS but overall their market is going to shrink pretty fast IMO.


Well we need to understand few things. The news belongs to 2014 and is all about a customer side story being reported by a newspaper but subsequently the company has been able to win contracts for several countries and has been reporting good traction which are always reflected in its numbers as well. However,

  1. Goofing with a contract is always a risk involved. The Management has very categorically said that they are not going to pursue and eye for U.S. contract because of complication and no margin because of fixed charge and no scope for visa renewal anything before 3 to 4 years and hence is a very low margin contract. However, the execution is always a risk involved and any goofing up in contract can always have repercussion. Just based on news paper story we should not conclude what really have had happened in the past.

  2. Spain contract win is a great achievement and if US processing would have been an issue, then winning Spain contract would not have been easy. But the risk of execution will always prevail and any one contract cancellation may have major spillover impact and a big dent on its image besides puncturing growth.

  3. Winning contract from VFS may also force the latter to grow aggressively but we need to understand that the opportunity space is considerably large to accomodate competition. We need to give credit to BLS management that the company is barely a decade old and has been pretty much able to establish strong beach head in an otherwise tough market. The gap between VFS and BLS is huge and offers considerable opportunity for BLS to grow at significant pace at for next 3 to 4 years. But this growth is directly link to economic cycle and can be derailed in event of outbreak of any unprecedented event.

  4. Share price no doubt is very volatile and need lot of patience for value buyers. The current market has generated multi-baggers across every nooks and corner and individuals are just vying for every investment they made to turn out as multi bagger in no matte of time. Technology is destroying us in every sphere of life and investments are no different wherein people started tracking price movement on daily basis even for their fundamental investments. One should remember, in April there was lot of hue and cry behind Trump’s take on restrictive Visa for US entry and its implications on other nations trade protectionism call which had led to sudden correction in the stock. Given its illiquid nature at that point in time, a small order has ability to influence big price movement. Further, the recent decline, one need further understand that the entire small and mid cap has been languishing over last many sessions and saw correction in last two days leading to fall in BLS prices as well. There has been major block deal in last two days in the scrip. Nearly 7.5% stocks changed hand on August 7th and not 12% of which 2.8% were part of a block deal. No body can justify everyday price movement.

As I said risk are always attached to every investment, it depends how close we are to reality and how closely we track and understand our investment.

Would be happy to understand further more insights on the company.


Good results by BLS. Sales up 50%, profit up 4 times.
Q1 Results

Disc: Invested.

BLS International: Strong execution, margin beat

CMP (Rs 184, Mcap Rs 19bn, BUY, TP Rs 271)

BLS international reported strong set of numbers, with beat on margins led by integration of higher margin Spain visa business. Revenue in 1Q stood at Rs 1.95bn up 0.4% QoQ and 57.1% YoY.

EBITDA margin stood at 22.2% (vs our expectation of 15.0%), expanded 453bps QoQ and 1,603bps YoY. This was primarily due to the integration of higher margin Spain business (~20% margin) and Punjab e-governance project (~27% margin).

PAT stood at Rs 0.29bn up 70.3% QoQ led by margin beat, we expected PAT of Rs 0.22bn. The company has set up 129 offices across 48 countries for the Spain contract. Out of total visa centers, ~80% are on partnership model, where only bottom-line is recognized in the P&L.

Tax rate increased to 8.3% in the quarter vs 6.0% in FY17 due to higher profit contribution from India e-governance business which attracts full tax rate.

Niche focus, strong execution and an asset light model have enabled healthy RoE of 35% in FY17. Net debt stands at Rs 0.17bn in FY17. We expect Revenue/PAT to grow at a CAGR of 36/49 over FY17-19E supplemented by Punjab e-governance and Spain visa contract. The company trades at a P/E of 19.1/16.9x FY18/19E earnings.

Will revise estimates post concall on 11th Aug 2017 Dial in 022 3960 0719


Attaching an excel sheet calculation of management expectations and my tempered realistic estimates of BLS. The company seems to be performing in line in the last 2 quarters (better actually).

bls.xlsx (16.4 KB)

Sammy, without these ancillary revenues I am unsure how to justify this company’s valuation given that their revenue and profit are more like projects which may or may not re-occur (after the contract period of 3-5 years) and hence we have no way to value their future cashflows and discount it back. Although they claim there are a lot of visa projects up for bidding, we cannot be sure VFS will not get more aggressive and outbid them seeing that they were outbid by BLS for the spain contract. VFS had put a bid of USD 22 per application (Source: If a bidding war ensues between these 2 heavyweights, will it lead to lower margins and hence lower ROE? Who is likely to win in this battle?

E-governance space looks promising but do we have any idea on the competitive landscape?

Disclosure: Researching stock

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Well there are 2 possibilities:

  1. Company keeps getting new business and keep investing into initial cost which lowers the current profits but raises the prospects of future growth.

  2. new business acquisition slows down, but as initial cost has been incurred on current projects, profitability increases.

In reality, it will be a mix of both. Company should be able to retain the profitability with new acquisitions here and there. As per 2016 BS, less than 30% of visa services have been outsourced. Surely, this no. will increase going forward. With increase in size and expertise, BLS will be a serious competitor to VFS.


Getting of new business is similar to IT business model, wherein incremental revenues depend upon newer projects or renewal or extension of existing contracts. As rightly said, the opportunity space is huge and offers considerable moat. BLS has shown incredible track record in terms of establishing strong beachheads in span of barely 11 years since its formation. Even though they are currently second only to VFS, the gap between them and VFS excessively wide which offers huge opportunity for BLS to grow. The real challnege will be how management can simplify the holding structure, bring in great governance practice and execute more efficiently and diligently its operations.

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