BLS International Services Limited (BLS) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to BLS International Services Limited Q2 and H1 FY27 Earnings Conference Call. As a reminder, all participant clients will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, Please signal an operator by pressing star, then zero, on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Dipali Kumari from Arihans Capital. Thank you, and over to you, ma'am.

Thank you. Good evening, everyone. Thank you all for joining the Q2H1 FY27 Earnings Call of PLS International Services Limited. 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 risk 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 Mr. Nikhil Gupta, Managing Director, Mr. Sikhar Agarwal, Joint Managing Director, and Mr. Amit Sudhakar, Chief Financial Officer. I would like to hand over the call to Mr. Sikhar Agarwal for his opening remark, post which Mr. Amit Sudhakar will discuss the financial performance of the company, and then we will open the floor for an interactive Q&A session. Thank you, and over to you, sir.

Good afternoon, everyone, and thank you for joining us for Business International's Q2 and H1 FY27 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 Q2, revenue reached a record 973 crores, an increase of 32% over last year. EBITDA grew 17% and FAD by around 10% for H1. For H1, revenue was up 29% and EBITDA grew by 20%. The margins in both businesses remain healthy. The movement is a consolidated margin is mainly because digital business now makes up large share of our revenue, following the consolidation of Atiyaki. I will leave the digital financial explanation to Amit. We also cross around 500 million applications processed globally during the quarter. It is a significant milestone for our teams and reflects the scale of the platform we have built over the years, with operations now spanning more than 100 countries. In Visa and Counselor Service business, we continue to perform steadily. Q2 revenue and EBITDA both grew by 11% year-on-year with EBITDA margin of about 42%. For the first half, segment revenue was around 1,070 crores. We processed around 11 lakh applications in Q2. Red revenue per application increased by 10% to 3,553 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 operations, and maintaining service quality. We are actively participating in tenders across Europe, North America, and other markets. We will share updates on new contracts once they are finalized. In digital services, the company continues to grow strong due to revenue increased by 66% to 463 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 Athyati. Our BC business recorded GTV of around 41,400 crores in Q2 and over 70,900 crores in H1. Loan disbursements were over 9,500 crores during the quarter. At the end of September, our network has more than 1,88,200 touchpoints. We also continue to expand our citizen service network. This includes operating Aadhaar Seva Kehinder under the UIDI contract and supporting more than 1,000 government citizen services through our technology and last mile network. Adyati 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. Along side business growth, we have continued to invest in capabilities and systems needed to support our expansion. During the quarter, we achieved CMM maturity level 5 certification and continued to maintain our ISO certification for quality and information security. We are also investing in AI automation and secure technology to make our services more efficient and reliable. We strengthen our global advisory board with appointment of former historian president and our global strategic advisor. This follows the earlier appointment of strategic advisors. We're also certified a great place to work in India in September. Alongside this, we are investing in AI-focused training and upselling so that our people are ready for the changes in our business. I now hand over the call to Mr. Amit Sudhakar to take care, our Chief Financial Officer, to take care of the financials.

Thank you, Shigar. Good afternoon, everyone. I will take you through the consolidated financial performance for the quarter and six months ended 30th September, 2026. For Q2, consolidated revenue was Rs. 973 crore, up 32% from Rs. 737 crore last year. This is the highest quarterly revenue we have recorded. EBITDA increased by 17% to Rs. 248 crore compared to Rs. 233 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. Digital service is growing faster and now contributes a large share of revenue, but its margin is lower than the Visa Councilor. Both businesses continue to maintain healthy segment margins. For H1, FI27, revenue was Rs. 1,863 crores, up 29%. EBITDA grew by 20% to Rs. 500 crores, with a margin of 26.9%. PACT was Rs. 403 crores, compared to Rs. 367 crores in the last year. An increase of 10%. Visa counselor contributed about 52% of the revenue in Q2, while digital service contributed about 48%. A year ago, the mix was 62 and 38% 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 scaling up. Visa councillor continues to contribute the larger share of the profit while digital is expanding our reach and adding new growth opportunities. Visa and Counselor Service segment due to revenue was 510 crores, up 11% from rupees 459 crores. EBITDA also grew by 11% to Rs.214 crore with a margin of 41.9%. For first half, segment revenue was Rs. 1,070 crore, up 16%, and EBITDA was Rs. 440 crore, also up 16%. EBITDA margin was 41.1%. Net revenue per application for the first half was Rs. 3,537, up 11%. Digital segment revenue for Q2 was Rs. 463 crore up 66% from Rs. 278 crore. EBITDA grew by 67% to Rs. 34 crore from Rs. 21 crore with a margin of 7.4%. Growth was driven by a business correspondent and loan distribution activity, along with full quarter consolidation of Atiyatir. For H1, revenue was Rs. 793 crore, up 50%, and EBITDA was Rs. 61 crore, up 57%. The margin improved to 7.7% from 7.4% last year. As we integrated Atyati 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 counsellor. The balance sheet, the net, the company has a healthy net cash position of Rs.1556 crore as on 30th September 2026. We will continue to deploy capital carefully with priority given to opportunities that sentence our existing businesses or add complementary capabilities. During the current quarter, ICRA rated the company to AA- for the long term and A1- 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 strategy opportunities while maintaining financial discipline. With that, I will hand over the call 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 touchtone telephone. 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 Purnatha Investment Advisors. Please proceed.

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?

Thank you. Net revenue per application basically means the direct cost which we incurred against the revenue which we earn, and this basically is a accumulation of all the business we are doing 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 5% to 6% per month.

Okay, great. And I have one more question. So, in the PPT, it was mentioned that till FF30, we were targeting like 20% to 25% revenue growth. So, can you also give a split of how much growth are we targeting in Vila and how much growth are we targeting in digital business?

Actually, we've missed out. Can you repeat your second question?

Yeah, sure. Actually, in PPT, I saw that we are targeting growth of 20 to 25% till 30. 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?

It will be approximately what we anticipate over the time is going to be between 60% to 65% to your visa and the balance will be from digital to digital.

Okay, okay. Got it. And also the margin guidance given was like target guidance was 20 to 30%. But as digital business has lowered the margin. So are we expecting some kind of margin expansion in visa business to bring overall margin back to 20 to 30% range?

So 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%.

All 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 a quite bit more, or digital business will bring margin expansion?

We believe Visa business is at its, has been stabilized at around 38 to 40%, and scope is there to improve in the digital business going forward.

Okay, okay. Thanks. That was very helpful. All the best and we wish for the upcoming best day. Thank you.

Thank you.

Thank you. The next question is from the line of Shreya Kejriwal from MoneyVesta Wealth Management. Please proceed.

Yeah, so firstly, congratulations on your results. So, my question was regarding the number of applications. If we check Y on Y, 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. And you are right that we peak, our number in Q1 are the highest, and then it's a seasonal impact, which we see in the Q2 and Q3. And then again, it starts going up, which is a seasonal, every year it has that seasonal impact.

So, it's based, particularly in Q2, you're talking about, like, there's a seasonal impact other than the geopolitical tension.

That's right.

Thank 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. Mr. Arjun, we can't hear you properly. Can you please come closer to the device?

Yes, hold on. Hello, is this better?

Yeah, please continue.

Yeah. Could you shed some light on the Spirian 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 in 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 presentation also, there is no issue with Spain, neither there was. And in Slovakia also, there is no issue anywhere. Vietnam also, there is 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.

Thank you. A reminder to all participants, anyone who wishes to ask a question, may press star and one on their touch-tone telephone. I repeat, anyone who wishes to ask a question, may press star and one on their touch-tone telephone. The next question is from the line of Viren Deshpande from Alpha Peak Investments. Please go ahead.

Hello, sir. Good afternoon. And we had decent results, and we have been posting consistently decent results over the 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. But it is a... It's surprising that the company doesn't get the discounting which it should get in the market, considering the business moat and technological edge, as well as our experience, and being the only listed company in this space, because the leader is not listed anywhere, 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 e-Services, which is a digital business which is having low margins of about 6 to 7 percent, our business is, visa business is having margin of around 40 percent, and high cash generation also, negative working capital. But what is the reason 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.

Ah. Hello, sir. Should I repeat my question?

When can you hear us?

Yes, yes, sir. I am in a position to hear you. Am I audible now?

Yeah, yeah, yeah. We can hear you well.

Yes.

So should I repeat the question? Whatever we heard, I'll just try to respond to that. And if something I missed out, let me know. So, see, Viren, 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. Markets, sometimes we are not aware of how it works. So, I will not be, we will 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, potent technological thing which we have, our company should have come under a very good premium. But the e-services company listed is getting very good discounting. Whereas our company is getting very low discounting, which is a low margin business. 5-7% margin, here it is 40%. But in this also, in this business, we have a very strong vote. But I, okay, that as you mentioned, market may correct itself and whenever it wants. But I wanted to know one more thing. Regarding this, in annual report also, I read about e-visas, I think, is being the trend in few countries. So, does this e-visa application, whenever these e-visa applications arise, does it affect our revenue per application and profitability?

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 continuing 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 e-visa.

But if at all they shift towards e-visa, it will affect the revenue per application because the cost will be over, etc.

There was no biometric five years back as we have answered this, and you have seen the last eight quarters, last four or five years, we will maintain our growth.

And another question is regarding this outsourcing, it is going to grow in a big way as per wherever we have mentioned that we hope to grow in our double digits minimum. And now this outsourcing, whenever it increases, which are the countries where they have made any fresh bids for that? Because some new contracts were expected.

No, all over Europe and different parts of the world. As and when it is finalized, we continue to announce results, as we have announced in the past.

So, is it expected in a 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 wins. The Portuguese government, Poland government, we won a 2,500 euro Aadhaar contract that we are deploying. So, we continue to win and deploy contracts.

And currently, you are working with 46 governments, no?

Correct.

So, that number is expected to grow in this year any further?

Yes.

More countries are likely to be added?

Yes. Yes.

Okay. And so, regarding this, as you mentioned, none of the countries where unnecessary allegations were made against BLS are true and nothing holds merit in those things.

Yeah, that we have clarified.

Yes, you have clarified very well that nothing in court has not inducted you at all in Spain also. That is a good thing. Okay, thank you very much and all the best.

Thank you. 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 site. 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, Ron, we had our investor call for the digital business today morning, and as far as stress is concerned, loans are not sitting on our books. So, we are only processing, and for processing, we are earning the commissions. So, there is no stress required as far as we are concerned.

Thank you. And sir, on the Q2 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 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%. 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 will want. So that will contribute to this 15% growth.

Okay, of course.

And on the tender pipeline side, so like we've, you've guided for around 1 to 2 billion 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 less.

So, we continue to win contracts, you know, we've won contracts with Slovakia government, Italy government, Portugal, Poland, Germany in the last one year. We've deployed those contracts. Those were all first-time contracts that we won with these governments. We've also won a contract with the Aadhaar UIDI about 2,500 crores. We continue to win tenders, and as and when results get announced, there are a lot of opportunities 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, maintaining our existing clients, M&A, etc. So, I think cost-efficient. We are focused on all the aspects of the development of the company.

And so, do we have any number on the first-time tenders you've told currently? So, how much of these pipelines in numbers have been converted? So, if you can provide us that number.

Honestly, I did not understand your question properly. You're talking about first-time outsourcing with the governments.

Yeah, yeah, first-time outsourcing tenders which you saw, like, you received good...

I was already... Yeah, you 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 were the first time.

Go on, sir. Okay, sir. 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 in per participant. Thank you. The next question is from the line of Chirag Patel, an individual investor. Please proceed.

My question is regarding to biobics. Why are we not doing any biobics? Why are we not deploying it?

As we have explained, we are using our cash for the expansion of the existing business and for few M&A opportunities which we have in the pipeline.

I understand that for acquisition, but while our own company is giving 29% ROE, and it's selling at a dirt cheap price, I would say, then why are we not deploying it, buying back our own company, rather than acquiring some other company that might give 15% ROE?

So, this is something which we will be, last time also we said we will be discussing with the board. And the board is going to take a call on the phone.

Okay, but sir, two quarters ago you said the same thing, about six months ago.

So I believe in this financial year they will take that call, I believe.

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 marginfall will be more due to digital services is rising in our top line in compared to visa services. Is it correct?

Yes, currently it is correct, because of the acquisition which we did. So, that has changed the mix in the current quarter.

Okay. And, sir, after acquiring of London Hotel, our fee down drastically. So, will you revive this decision to have hotel business or not?

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 go into this or not.

Any specific reason we went to hotel business in compared to visa business or digital business?

See, we have explained it 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 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 the ones which we have purchased, but we want to see whether it adds to our strategy.

Okay. Any buyback plan of shares? Is our share down drastically? And we have sufficient cash balance in our pocket?

So it is there on the list and we are discussing that with the board. But let's see when we take a final call, we'll come back.

Because if you take decision later, share price will fall more drastically. So, if you take it on the time, it will be good for us. That is my request. So, we will take into account. Thank you. Thank you. Thank you.

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing the men. But are you there?

Okay, I think to sum up, we have made good

progress in the first half of FY27. Both businesses are growing and we continue to invest in technology. People and the operating capabilities needed for the next course. Looking ahead, our FY30 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 30%. We plan to get there by growing our existing visa business, winning new contracts, expanding adjacent services such as IDATA and CI, scaling digital services and G2C activities, using our 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 very much. On behalf of Arihans Capital Markets Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line. Thank you.