IPO listed on 6 Feb'24
BLS E-Services Ltd
Minimum Investment
₹ 14,580 / 108 shares
Grey market premium
₹ 158 (117% premium)
Issue price
₹ 135
Listing price
₹ 305
Listing day %
171%
Listing on
Feb 06, 2024
Our Verdict:
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- Over the past three years, BLSe has exhibited remarkable growth in financials, particularly through strategic acquisitions. The firm stands out with its exceptional Return on Equity (ROE) exceeding 33%.
- In terms of valuation, the IPO is reasonably priced with a Price-to-Earnings (P/E) ratio of 44.7x based on FY23 earnings. Additionally, the grey market premium (GMP) for the IPO suggests solid listing on the bourses.
- Given the asset-light business model, wide reach, robust tailwinds and strong parentage, we believe BLSe is well-positioned to take advantage of digital initiatives in India. Considering these factors, it is advisable for investors to subscribe to this IPO from a short-to-medium term perspective.
- Nonetheless, for long-term investment, it is essential to keep a close eye on the company's financial sustainability in the ensuing quarters as it is difficult to evaluate its business model and growth trajectory given its relatively brief operational history.
About the company
Founded in
12 Apr'16
Managing director
Shikhar Aggarwal
- BLS E-Services Ltd (BLSe) operates as a subsidiary of BLS International Services Ltd, a major player in the visa application outsourcing sector with a strong global footprint and a diverse service portfolio. The firm specializes in providing digital services, which include (i) Business correspondent functions for leading banks, (ii) Assisted E-services, and (iii) E-Governance services at the grassroots level in India.
- Leveraging its extensive network, BLSe facilitates the delivery of critical public utility services, social welfare programs, health, financial, educational, agricultural, and banking services catering to both government (G2C) and business (B2B) sectors. As of September 30, 2023, its expansive network comprises 98,034 BLS touchpoints, including 1,016 BLS Stores.
STRENGTHS
- Impressive Financial Growth: Between FY21 and FY23, BLSe demonstrated substantial financial growth. This includes a Compound Annual Growth Rate (CAGR) of 94% in Revenue from Operations, an increase of 158% in EBITDA, and a remarkable 154% surge in Net Profit.
- Strong Return Ratios: In FY23, the firm’s Return on Capital Employed was a notable 30.62%, with an even higher Return on Equity at 33.3%.
- Increasing Profitability Margins: Over the past three fiscal years, there has been a steady growth in EBITDA and Net Profit Margins, reaching 14.73% and 8.36% in FY23, respectively. By September 2023, the net profit margin improved even more to 9.40%.
- Reduction in Debt-to-Equity Ratio: The firm's Debt-to-Equity Ratio has steadily fallen, from 1.14 in FY21 to 1.01 in FY22, and significantly to 0.05 in FY23.
- Robust Interest Coverage Ratio: The Interest Coverage Ratio, indicative of the company's ability to cover interest payments on outstanding debt, was strong at 8.53 in FY23, and even more robust at 61.43 in the six months ending September 2023.
RISK FACTORS
- Reliance on Subsidiaries: A significant part of BLSe’s operations, especially Business Correspondents services, is managed through its subsidiaries. These subsidiaries are crucial for the firm's revenue and cash flow. If these subsidiaries fail to meet their obligations, it could have a negative impact on the firm's business performance and operational results.
- Single Customer Dependency: BLSe's major revenue source is a single customer, a leading PSU bank, contributing ~60% of its operational revenue in the six months up to September 30, 2023, and in Fiscal 2023. The firm operates without long-term contracts with its customers. Losing any of its banking partners could harm its business, cash flow, operational results, and financial stability.
- Negative Cash Flows: BLSe has seen negative cash flows in investing and financing activities over the past three years and the six-month period ending September 30, 2023. Continual negative cash flows could adversely affect the firm’s operations, financial health, and overall performance.
- Geographic Concentration: BLSe's E-Governance Services are limited to Punjab, Uttar Pradesh, and West Bengal. Any unfavourable changes in these specific regions could negatively impact the firm’s business, financial condition, and operational results.
Issue details
Issue type
Mainstream
Issue size
₹ 310.91 crore
Fresh Issue
₹ 310.91 crore
OFS
₹ -
Price range
₹ 129 - 135
Lot size
108 shares
Issue Objective
The firm proposes to utilize the net proceeds from the issue towards:
- Strengthening its technology infrastructure;
- Achieving organic growth through setting up BLS stores;
- Achieving inorganic growth through acquisitions; and
- General corporate purposes
Dates
Bidding open
30 Jan'24
Bidding close
1 Feb'24
Allotment date
2 Feb'24
Refund date
5 Feb'24
Listing
6 Feb'24
IPO Reservations
Qualified institutional buyers
>75%
Non-institutional investors
>15%
Retail individual investors
>10%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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