BLS International Services (NSE:BLS) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to BLS International Services Limited Q2 and H1 FY 'twenty seven Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to miss from Ali Khan Capital. Thank you, and over to you, ma'am. Thank you. Good evening, everyone. Thank you all for joining the q two h one FY twenty seven earnings call of BLS International Services Limited.

0:55 Before we proceed, let me remind you that the discussion may contain forward looking statements that may involve known or unknown risks, uncertainties and other factors. It must be viewed in conjunction with the company's business risks that could cause future results, performance, or achievements to differ significantly from what may be expressed or implied by such forward looking statements. From the management today, we have mister Nikhil Gupta, managing director mister Sikhar Agarwal, joint managing director and mister Amit Sadhakar, chief financial officer. I would like to hand over the call to mister Sikhar Agarwal for his opening remarks post which Mr. Amit Sudhakar will discuss the financial performance of the company, and then we will open the floor for an interactive q and a session. Thank you, and over to you, sir.

1:52 Good afternoon, everyone, and thank you for joining us for BLS International's q two and h one FY twenty seven earnings call. I hope you've had a chance to go through our results and investor presentation. We have had a good first half with both business contributing to growth. In q two, revenue reached a record INR $9.73 crores, an increase of 32 over last year. EBITDA grew 17% and bad by around 10% for H1. For h one, revenue was up 29% and EBITDA grew by 20%. The margins in both businesses remain healthy. The movement in the consolidated margin is mainly because digital business now makes up large share of our revenue, following the consolidation of Adyati. I will leave the financial explanation to Amit. We also crossed around 500,000,000 applications processed globally during the quarter. It is a significant milestone for our team and reflect the scale of the platform we have built over the years with operations now spanning more than 100 countries.

2:48 In Visa and Counselor Service business, we continue to perform steadily. Q2 revenue and EBITDA both grew by 10... 11% year on year with EBITDA margin of about 42%. For the first half, segment revenue was around thousand 70 crores. We processed around 11 lakh applications in q two. Net revenue per application increased by 10% to 3,550 rupees. This was supported by better pricing on new contracts and higher contribution from value added services. It is encouraging to see revenue per application improving even as volumes vary across markets. We remain focused on improving operational efficiency, growing self managed operation, and maintaining service quality. We are actively participating in tenders across Europe, North America, other markets. We will share update on new contracts once they are finalized.

3:36 In digital services, they can... The company continues to grow strong. Q2 revenue increased by 66% to $4.63 crores, and EBITDA grew by 67% to 34 crores. The growth came from our BC business and loan distribution business as well as full quarter contribution from Adyasi. Our BC business recorded GTV of around 41,400 crores in q two and over 70,900 crores in h one. Loan disbursements were over 9,500 crores during the quarter. At the end of September, our network had more than one lakh 88,200 touch points. We also continue to expand our citizen services work. This includes operating under the UIDI contract and supporting more than 1,000 government citizen service to our technology and last mile network. Atiati adds banking technology, financial inclusion, and micro lending capabilities to this business. Our focus now is on integrating the platform and using our wider network to create further opportunities.

4:33 Alongside business growth, we have continued to invest in capabilities and systems needed to support our expansion. During the quarter, we achieved CMM maturity level five certification and continue to maintain our ISO certification for quality and permission security. We're also investing in AI automation and security technology to make our services more efficient and reliable. We sent them our global advisory board with appointment of former president and our global strategic adviser. This follows the earlier appointment of the strategic advisers. We're also certified a great place to work in India in September. Alongside this, we are investing in AI focused training and upscaling so that our people are ready for the changes in our business. I now hand over the call to Vasant Sudhakar to take care... Our chief financial officer to take care of the financials. Thank you, Shigar. Good afternoon, everyone.

5:20 I will take you through the consolidated financial performance for the quarter and six months ended 09/30/2026. For q two, consolidated revenue was rupees $9.73 crores, up 32% from rupees $7.37 crores last year. This is the highest quarterly revenue we have recorded. EBITDA increased by 17% to rupees $2.48 crores compared to rupee $21.13 crore in corresponding quarter. The EBITDA margin was 25.5 compared to 28.9% last year. This is mainly due to the changing revenue mix.

6:06 Digital service is growing faster and now contribute a large share of revenue, but its margin is lower than the Vela counselor. Both businesses continue to maintain healthy segment margins. For h one f I 'twenty seven, revenue was INR $18.63 crores, up 29%. EBITDA grew by 20% to INR 500 crores, with a margin of 26.9%. PAT was rupees 403 crores compared to rupees 367 crores in the last half half last year, an increase of 20... 10%.

6:53 Visa counselor contributed about 52% of the revenue in q two, while digital service contributed about 48%. A year ago, the mix was 6238%, respectively. In terms of EBITDA, Visa counselor contributed about 86% with digital service contributing the remaining 14%. This show how quickly the digital service is scale... Is scaling up scaling up. Visa counselor continued to contribute the largest share of the profit while digital is expanding our reach and adding new growth opportunities. Visa and counselor service segment q two revenue was 5,000...

7:39 510 crores, up 11% from rupees $4.59 crores. EBITDA also grew grew by 11% to INR $2.14 crores with a margin of 41.9. For half... First half, segment revenue was rupees 1,070 crores, up 16%, and EBITDA was rupees 440 crores, also up 16%. EBITDA margin was 41.1%. Net revenue per application for the first half was rupees 350... 3,537 per... Rupees, up 11%.

8:29 Digital segment revenue for q two was rupees $4.63 crore, up 66% from rupees $2.78 crore. EBITDA grew by 67% to rupees 34 crore from rupees 21 crore with a margin of 7.4%. Growth was driven by business correspondent and loan distribution activity along with full quarter consolidation of Akyati. For H1, revenue was INR $7.93 crore, up 50%, and EBITDA was INR 61 crore, up 57%. The margin improved to 7.7% from 7.4% last year.

9:20 As we integrated Abhiyati and offer more services through our network, we see scope of improving the margin over time while recognizing that digital service has a different margin profile from Visa and Counselor. The balance sheet, the net... The company has a healthy net cash position of rupees 1,556 crore as on 09/30/2026. We will continue to deploy capital carefully with priority given to opportunities that sentence our existing businesses or add complementary capabilities.

10:06 During q... During the current quarter, Iqra rated the company to double a minus for the long term and a one plus for the short term. This reflects the growth of our financial position. We remain well placed to support our growth plan through investment in our businesses, technology, and selective selective strategy opportunities while maintaining financial discipline. With that, I will hand over the call for... To the moderator for the question and answer session. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch tone telephone.

10:55 If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Preetam Kamaji from Purnata Investment Advisors. Please proceed. Oh, hi. So my first question is related to net revenue per application. So now as most of the transition is complete, what growth is company expecting in net revenue per application going ahead? So the current net revenue per application basically means the direct cost which we incurred against the revenue which we earn.

11:49 And this basically is a cumulation of all the business we are doing in globally at different countries, and it varies country to country. And as the new contracts are coming at a better pricing, and we are adding new services, we see this growing at five to 6% per annum. Okay. Oh, great. And I have one more question. So in the PPT, it was mentioned that we were targeting, like, 20 to 25% revenue growth. So can you also give split of how much growth are we targeting in media and how much growth are we targeting in digital business? Actually, missed out.

12:39 Can you repeat your second question? Sure. Yeah. Yeah. Actually, in PPT, I saw that we are targeting growth of twenty two, twenty five percent till FY thirty. So I just wanted to understand how much growth are we expecting in visa business, and how much growth are we expecting in digital business? I... It will be approximately what we anticipate over the time is going to be between 60 to 65% to be your visa and the balance of Okay. Okay. Got it. And also, the margin guidance given was, like, a target guidance was 20% to 30%. But as digital business has lowered with the margin, so are we expecting some kind of margin expansion in Visa business to bring overall margin back to 20% to 30% range?

13:35 It will basically will depend on the mix of both the businesses at that particular time. But if you see this quarter also, our consolidated EBITDA margin are around 25.5%. Oh, right. Right. So, yeah, so basically, to bring it back to, like, bring it to 20 to 30% range, so are we expecting margin expansion across Visa quite a bit more or digital business will bring margin expansion? It... We believe Visa business is at its... Has been stabilized at around 38 to 40%, and Okay. Scope is there to improve in the digital business going forward.

14:22 Okay. Okay. Thanks. That was very helpful. All the best, and this is for the upcoming best day. Thank you. Thank you. Thank you. The next question is from the line of Shreya Kejriwal from Wealth Management. Please proceed. Yeah. So firstly, congratulation on your results. So my question was regarding the number of applications. If you check YONY, so it's, like, 3% down. Like, so what drove it? Like, it was something specific country. Why were any demand issue? And my second question was regarding the visa revenue. It's also down, like, 9% quarter on quarter. So was that seasonal? Yes. So first, there was a down in the numbers, mainly last year versus this because of the geopolitical situation in The Middle East.

15:13 And you are right that we peak our number in q one are the highest, and then it's a seasonal impact, which we see in the q two and q three. And then, again, it start going up, which is a seasonal... Every year, it has that seasonal impact. So it's this... What... Particularly in q two, you're talking about, like, there's a seasonal impact other than the geopolitical tension.. Okay. That's right. You. Yeah. Thank you, sir. That's it. Thank you. The next question is from the line of Arjun Shah from Aran Investments. Please go ahead. Two things in particular. The the Spain issue, if if you could... If there's any other can't hear you properly. Can you please come closer to the device?

16:06 Yeah. Hold on. Is this better? Yeah. Please continue. Yeah. Could you shed some light on the SPILIAN issue if there are any more developments there, or are we still... Are we in the clear? Have you heard anything anything about that? And also about Slovakia, I believe... I think we had some issues with Slovakia and Vietnam and a few other countries. So do we have... Do we still have a global sort of I think, first of all, we have clarified in our investor presentation also. There is no issue with Spain, neither there was. And also, there is no issue anywhere. Vietnam, also, was no issue. The articles, if they keep on coming, we cannot comment on that. But with our client government, we have no issue. We have clarified that also.

16:58 Oh, okay. Perfect. Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and 1 on their touch tone telephone. I repeat, anyone who wishes to ask a question may press star and 1 on their touch tone telephone. The next question is from the line of from Alpha Peak Investments. Please go ahead. Hello, sir. Good afternoon. And we had a decent result, and we have been posting consistently decent results over last many years. And due to high base, I think the growth rates have tapered off a bit, but we still continue to grow in double digits.

17:50 But it is surprising that the that the company doesn't get the discounting which it should get in the market considering the business more than technological age as well as our experience. And being the only listed company in this space because the leader is not listed anywhere. What what might be the reason for that? Because we also have cash. We have been applying it quite well. Our return on equity is good. But our subsidiary BLS eServices, which is a digital business, which is having low margins of about six to 7%. Our business is... Visa business is having margin of around 40% and high cash generation also, negative working capital.

18:40 But what is the reason you you you feel that the company is not getting the real valuation we should get? Hello? Ladies and gentlemen, the line for the management got disconnected. Please stay connected while we reconnect them. Ladies and gentlemen, the management is back online with us. You may continue, please. Hello, sir. Should I repeat my question? When can you hear us? Yes. Yes. We are... I'm in a position to hear you. Am I audible now to you? Yeah. Yeah. Yeah. We can hear you well. Yes. So So should I repeat the question?

19:27 Uh-huh. Okay. Whatever we heard, I'll I'll just try to respond to that. And if there's something I've missed out, you can let me know. So Okay. See, wherein we are focusing more on the performance of the company and are trying to maintain our growth, what we have been doing to continue the growth path on which we are. Market, sometimes we are not aware of and how it works. So I will not be... We'll not be able to give any comment on how the market and how they value it. Maybe you know better how they do it. Actually, sir, with due respect to you, our performance has been really good. And with the strong moat and technological thing which we have, our company should have commanded a very good premium.

20:14 But the eservices company listed is getting very good discounting. Whereas our company is getting very low discounting, which is a low margin business. 57% margin here, it is 40%. But in this also... In this business, we have a very strong moat. But I... Okay. That as you mentioned, the market may correct itself and... Whenever it wants. It... But I I I wanted to know one more thing. Regarding this... We are in annual report also, read about... Evisa, I think, is being the trend in few countries. So does this eVisa applicant... Whenever these eVisa applications arise, does it affect our revenue per application and profitability?

21:00 No. As we said that many countries are doing different models. The countries that we are working with currently continue to operate on the model that we are operating, and we are continue to assist the countries in different kind of models. So we are growing as a company. And the countries where we provide services don't have the e visa. It does Gotcha. But if at all they shift towards e visa, the... It will affect the revenue per application because it... The cost will be lower, etcetera? There was no biometric five years back as we have answered this. And you have seen the last eight quarters... Last four, five years, it continued to We will win... Maintain our growth. And another question is regarding this outsourcing.

21:46 With the... Is going to grow in a big way as per... They were... We have mentioned that we hope to grow at minimum in our double digits minimum. And from this outsourcing, whenever it increases, which are the countries where they are made in fresh bids for that? Because some new contracts were expected. All over Europe and different parts of the world. As and when it is finalized, we continue to announce results as we were announcing the past. So is it expected in due course of time, or it will take more time to get some new contracts? Due course of time. We recently announced... This year only we announced bigger... Big big wins The Portuguese government, Poland government, we won a 2,500 per hour contract that we are deploying. So we continue to win and deploy contracts.

22:39 Okay. And then currently, you are working with 46 governments. Correct. Gotcha. So that that that number is expected to grow in this year any further? Yes. More countries are likely to be added? Yes. Yes. Okay. Okay. And regarding this, as you mentioned, none of the countries where unnecessary allegations were made against BLS are true and nothing worth... No. Nothing worth merit in those things. Yeah. That we have clarified. Yes. You have clarified very well. Let me have nothing. I didn't know... Court has not indicated you at all in Spain also. That is good thing? Yeah. Okay. Okay. Thank you very much, and all the best. Thank you.

23:26 Thank you. The next question is from the line of Rohan from Arihant Capital. Please go ahead. Hello, sir. My question is on the digital service side. So how much of the growth which we have seen in the last quarter is due to credit facilitation? And also, can you also provide the like if you have any stress testing done on the loan origination book, sir? So loan, we had our investor call for the digital business today morning. And as far as stress stress is concerned, these loans are not sitting on our books.

24:11 So we are only processing, and we are... Of our processing, we are earning the commissions. So there's no test test required on... And as per we are concerned. Got it. And, sir, on the q two volumes, which we see around 10.9 lakhs with net revenue per application of about 10.2%. So with the volume growth we have seen, you've guided us in stable. So what contract wins or pricing actions it would drive the next leg of Visa and consider growth, sir? And do we expect to reach beyond 12 to 15% of our revenues, So that's what our target is to reach and continue growing at 15%.

25:00 And that will come on the back of the travel industry's growth plus our value added services and the other revenue and the new contracts which we'll want. So that will contribute to this 15% growth. Okay. Got it. And on the tender pipeline side, so, like, we've... You guided for around 1 to 2,000,000,000 of a US dollar of tender pipeline. So what has converted since then, like, since the time you've guided? And how does we defend our win rates against the RPS, like particularly on first time sourcing tenders where incumbency matters lesser?

25:47 So we we continue to win contracts. You know, we we won contracts with government, Italy government, Portugal, Poland, Germany in the last one year. We've deployed those contracts. Those are all first time contracts that we won with these governments. They also won a contract with the Aadhaar, UIDI for 2,500 crores. So we continue to win tenders, and as and when results get announced, there are a lot of opportunity in the market, and we are continuing to maintain our growth trajectory as you have seen. So I think from our point of view, we are working on tender, win, maintaining our existing clients, m and a, etcetera. So I think a cost efficient. We are focused on all aspects of the growth of the company. And, sir, do we have any number on the on the first time tenders used...

26:35 You've told currently? So how much of week... Like, how much of this pipe... Pipeline in numbers have been converted, sir, if you can provide us that number? Honestly, I did not understand your question properly. Don't want first time outsourcing with the governments. Yeah. Yeah. First time outsourcing tenders which you saw, like, you received good We we already... Yeah. We we started working with the Philippine government. That was the first time. German government was the first time. Brazil government was the first time. So many governments was the first time. Got it, sir. Okay, sir. Got it. Thank thank you very much, sir. That answers my question. Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the queue, please limit your questions to two per participant.

27:28 Thank you. The next question is from the line of, an individual investor. Please proceed. Hi, sir. My question is regarding your... Regarding to. Why are we not doing any? We want we want the substance that you know. And why are we not declaring it? See, as we have explained, we are using our cash for the expansion of the existing business and for few m and a opportunities we are... Which we have in the pipeline. Yeah. I I understand that that... For the quarter, sir. But while our own company is giving 29% ROE, and it's it's selling it at that cheap price, I would say. Then why are we not deploying it, buying it because our own company rather than acquiring some of the company that might give 15% ROE?

28:26 So this is something which we will be... Last time also, we said we will be discussing with the board, and board is going to take a call on the Okay. But, sir, two quarters ago, you said the same thing about six months ago. So I I believe in this financial year, they will take that call, I believe. Correct. Okay. Okay. Thank you. Thank you. The next question is from the line of Ravi Naredi from Naredi Investment. Please go ahead. Thank you very much to give me the opportunity. Sir, I think margin fall will be more due to digital services is rising in our top line in compared to Visa services. Is it correct?

29:24 Yes. Currently, it is correct because of the acquisition which we did. So that has changed the mix in the current quarter. Okay. And, after acquiring of London hotel, our fee down drastically. So will you revise this decision to have the hotel business or not? See, we have explained it last time also that we are not going to invest further till we see the performance of the existing one for a year or two. And then we will take a strategic decision whether to... Whether we should should go into this or no. Any specific reason we went to hotel business in compared to visa business or digital business?

30:16 See, we have explained it in the... When we did the acquisition last year that we wanted to see whether we wanted to be part of the travel industry, and there was a synergy with the with the travel agents. So we thought we'll experiment with this and then take our next call after running it. They are running well, all of these ones which we have purchased, but we want to see whether they... To our strategy. Any buyback plan of shares, there's our share down drastically, and we have sufficient cash balance in our pocket. Well, it is there on on the list with the... We are discussing that with the board. But let's see when we take a final call, we'll come back.

31:06 Because if you take decision later, share price will fall more drastically. So if you take it, we'll... On on the time, it will be good for our... For us. That is my request. Sure. We'll take into account. Thank you. Thank you. Thank you. Thank you. You. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments. Sir, are you there? Okay. I think to sum up, we have made good progress in the first half of FY twenty seven.

31:52 Both business are growing, and we continue to invest in technology. People and the operating capabilities needed for the next course. Looking ahead, our FY thirty ambition is to reach revenue of 6,300 to 6,500 crores with an annual revenue growth of 20 to 25% and EBITDA margin of 28 to 50%. We plan to get there by growing our existing Visa business, winning new contracts, expanding adjacent services such as iData and CI, scaling business services and g two c activities, using our net... Networks more effectively, investing in technology and pursuing selective acquisitions when they add capabilities. Thank you, everyone. I wish you a very, very happy Diwali. Thank you. Thank you. Thank you very much. On behalf of Arihant Capital Markets Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.