BLS International: This small-cap stock doubled investors' wealth in 2022; given a 10x return in 3 years

Continuing its upward journey, BLS International services stock hit an all-time high during Wednesday's intra-day trade after the company's Q2 report card beat street estimates. The stock opened strongly at ₹378, 11.50% higher than the previous close of ₹339, and it continued to surge in trade to reach an all-time high of ₹380. The stock then finished the day with a gain of ₹21.90, or 6.46% higher, at ₹360.90.

The stock has seen a one-way rally so far in 2022, returning 282% to date, rising from ₹94 levels to ₹361 during the same time period the Nifty has only increased by 4.62%. On average, stock jumped 28.2% month over month. Further, over the last three years, the market price of the stock has zoomed by 1,095%.

The stock's 52-week high and low levels were Rs. 380 apiece and Rs. 89.7 apiece, respectively. Using the current price, the stock has risen 302.25% from its 52-week low.

BLS International Services is a small-cap stock with a market cap of ₹7,413 crore. The company is engaged in the business of providing outsourcing and administrative tasks for visa, passport, and consular services to various diplomatic missions across the world. It also provides citizen services to state and provincial governments across Asia, Africa, Europe, South America, North America, and the Middle East.

BLS International partners with 46 client governments in the provision of outsourced visa and passport, front end and citizen, consular and passport, verification and attestation, and E-Visa services, its website shows.

After posting a 50% YoY rise in consolidated net profit for Q1 FY23, the company reported an 86% jump in its consolidated net profit at ₹51 crore for the September ending quarter compared to ₹27.46 crore in the year-ago quarter.

Revenue from operations increased by 87.36% year on year to ₹356.84 crore in Q2 from ₹190.46 crore in the previous quarter, driven by the continued strong recovery in visa and consular business.

The operating profit surged to ₹56.8 crore from ₹27.6 crore in Q2 FY22. The company reported its best EBITDA margin of 15.92%, up 145 basis points (bps) year on year. On the expenses side, the company reported a nearly 84% YoY jump in total expenditure of ₹300 crore, mainly due to a rise in employee costs due to the addition of the ZMPL workforce and increments given during the period.

According to Trendlyne data, the company has zero debt. For the first half of 2022–23, the company's net profit surged 71.22% to ₹81.69 crore. Revenues grew 70.64% to ₹629.66 crore.

"Our second-quarter performance has been in line with expectations." "We are seeing good growth coming in from our visa and consular services as well as e-Governance and banking correspondence businesses," Shikhar Aggarwal, Joint Managing Director, BLS International, said.

"We are well above pre-COVID levels, and once business recovers from key markets such as China and Russia, the ongoing growth from the other regions will be further complemented," he added.

Meanwhile, in June, the company signed a contract with the Royal Thai Consulate-General, Mumbai, for visa services, and in the same month, it acquired Zero Mass Private Limited (ZMPL) for Rs. 120 crores. ZMPL operates the largest BC network for the State Bank of India (SBI), with approximately 11,500 active CSPs (approximately 15% of all SBI BCs). Apart from SBI, ZMPL has contracts with Utkal Grameen Bank and Karur Vysya Bank, Business Standard reported.

FIIs have been bullish on the company for a long time. This is clear given their increased exposure to the stock over the last four quarters. FIIs held a stake of 0.7% back in the September 2021 quarter, their exposure now stands at 6.7%. Promoter holds a 74.4% stake in the company, while the public owns an 18.6% stake.

An average of 01 analysts polled by MintGenie have a 'hold' call on the stock.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.