Multiple Growth Stocks: BLS International has returned over 200% in 2 years, up 1850% in 4 years. Is it worth investing?

Investing in the stock market can be very rewarding if you choose the right stocks, but it comes with the risk of disappointing results if you invest unwisely. BLS International Services shareholders have a lot to celebrate, as the company’s shares have seen significant growth in recent years.

Shares worth ₹Two years ago the price was 120, now they are trading at ₹384.50 per share, a significant increase of 220%. The performance was even more impressive since July 2020, when the stock skyrocketed by 1850%. The stock experienced a continuous rally between March 2022 and February 2024, resulting in a 700% increase.

Looking at the yearly performance, the stock was up 124% in CY21 and continued its impressive growth with 246% and 93% in CY22 and CY23 respectively. The stock has returned 20% this year.

BLS International Services, which has a market capitalization of ₹16,000 crore, is a global technology-enabled services provider that has a strong presence in offering government services. These services include visa, passport, consulate, e-government, credentialing, biometrics, e-visa and retail services and the company has been in operation since 2005.

According to the company’s website, BLS International works with more than 46 government client institutions, including diplomatic missions, embassies and consulates, and maintains an extensive network of more than 50,000 centers worldwide.

Solid performance

The company reported excellent results in the June quarter. Operating revenues increased by 28.5% year-on-year, ₹493 crore in Q1 FY25. The growth was mainly driven by the Visa and Consular (VC) business, which grew a solid 36% YoY on the back of 18% growth in both volumes and net revenue per app. However, the digital business reported lukewarm revenue in Q1 FY25.

EBITDA increased by 66.3% year-on-year to ₹133 crore, benefiting from the shift from partner-managed to self-managed centres across geographies within the VC industry and improved service differentiation in the digital segment.

EBITDA margin increased 615 basis points year-on-year to 27%, driven by higher contribution from high-margin VC business, which accounted for 91% of EBITDA, compared with 89% year-on-year and 85% quarter-on-quarter. As a result, PAT increased 70% year-on-year to ₹114 crore, thanks to good operating results.

The company recorded over 3.5 crore transactions in the business correspondent segment with the gross transaction value exceeding ₹20,000 crore in Q1 FY25. The digital business maintained over 27,000 customer service points (CSPs) and 1.1 lakh touchpoints.

Additionally, the company signed a service provision agreement with Axis Bank and generated leads worth approx. ₹1,000 crore for private banks like HDFC Bank and Kotak Mahindra Bank in Q1 FY25, as against ₹602 crore was generated in fiscal 2024.

The acquisition of iDATA was also completed in the first quarter of fiscal year 2025. iDATA generated revenue of approx. ₹246 crore and EBITDA of around ₹144 crore in CY23. This acquisition increases BLSIN’s operational scale and profitability in the VC services market.

Nuvama maintains an optimistic outlook

Domestic brokerage firm Nuvama Professional Clients Group maintained a positive outlook on the company, noting that it beat its expectations in the June quarter. Nuvama highlighted that the company is the only listed Indian player in the global G2C visa processing and outsourcing services, operating on an asset-light and equity-light model, ensuring strong cash generation with minimal growth-related costs.

New visa deals and the expansion of digital services in India are expected to boost Business Correspondents’ (BC) revenue and profitability. The company has a history of strategic acquisitions that have enhanced its offerings and made it easier to enter the market, it noted.

The management plans to raise ₹2,000 crore through equity capital, despite already having a significant cash balance, is expected to fund further acquisitions and accelerate growth in the medium to long term.

Even though the company’s Q1 results beat expectations, the brokerage firm has not changed its FY25/FY26 estimates. It forecasts a revenue/EPS CAGR of 30%-35% in FY24-FY26E. Hence, it has maintained a ‘buy’ rating with a target price ₹518 per piece.

Reservation: The views and recommendations in this article are those of the individual analysts. They do not reflect the views of Mint. We recommend that investors consult certified experts before making any investment decisions.