Shares of BLS International Services, which were trading at ₹10.90 apiece three years ago, have seen a remarkable upward trend, surging by a whopping 1580%, to reach the current level of ₹183.
BLS International Services is a small-cap stock with a market cap of ₹7,575 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.
From March 2022, the shares recorded positive monthly returns for ten consecutive months until December 2022. During this period, the stock price surged by a staggering 255%, reaching a new all-time high of ₹208.90 per share. Overall, the stock delivered a remarkable gain of 250% in CY22.
This strong rally built upon the significant returns achieved in CY21, where the stock delivered a multibagger return of 121% while in CY20, it yielded a return of 29%.
In the current year, the stock has continued to perform well, delivering a decent gain of 10.83% so far.
Positioned for growth in the visa outsourcing industry
According to domestic brokerage firm Nuvama Professional Clients Group, BLS International is well-positioned for growth in the visa outsourcing industry. With a market worth $2.6 billion and significant entry barriers, this industry has witnessed the delegation of administrative tasks by consulates to specialized service providers worldwide.
This strategic move aims to enhance operational efficiency, reduce turnaround time, and cut costs, said the brokerage firm.
As a market leader in visa outsourcing, VFS Global currently dominates 35% of the market share. However, given the industry's relatively young age of less than two decades, there is immense potential for further outsourcing.
BLS International, with its strong brand positioning and competitive advantage, currently holds close to 12% of the market share, as per the brokerage.
The brokerage highlights the niche nature of the industry and the limited number of key players, which creates a significant opportunity for BLS International to expand its market share.
The company is expected to secure new contracts and further grow its presence in the industry. With favorable market dynamics and its established position, BLS International is poised for continued growth and success in the visa outsourcing space, the brokerage noted.
Digital services: High growth potential
The company recently consolidated its e-governance and banking correspondence businesses into the Digital Services segment. Through a widespread network of touch points, the company provides G2C services and banking correspondence services through tie-ups with various banks like SBI, PNB, and BOB, said Nuvama.
Further, the acquisition of Zero Mass Pvt. Ltd. in 2022 boosted this line of business. With a higher number of touchpoints pan-India, BLS strategizes to boost its top line and margins from value-added services in this segment as well, it added.
Solid fundamentals
In the recent March quarter, the company reported an impressive 120% year-on-year growth in its consolidated net profit, reaching ₹77 crore compared to ₹35 crore in the same period last year. Its revenues experienced a substantial improvement, rising by 76% YoY to ₹449 crore from ₹254 crore in Q4 FY22.
The company has consistently demonstrated revenue growth over the past nine quarters, starting from the June 2021 quarter. In FY23, its revenues surged by a significant 78.35% to reach ₹1,516 crore.
Furthermore, it is worth noting that the company is debt-free and exhibited a remarkable Return on Equity (RoE) of 52.95% in FY23, marking a substantial increase from 27.27% in FY22. Additionally, its Return on Capital Employed (RoCE) stood at an impressive 58.84% in FY23, compared to 29.02% in the previous fiscal year, Trendlyne data showed.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
