On Tuesday, January 30, 2024, subscriptions for BLS E-Services' Rs 310.91 crore initial public offering (IPO) will be accepted. With a lot size of 108 equity shares and multiples thereof, the corporation is offering its shares for sale for between Rs 129 and Rs 135 apiece. The issue will be put up for three days of bidding, ending on February 1.
April 2016 saw the incorporation of BLS-E Services. This digital service provider provides aided E-Services, E-Governance services at the community level in India, and business communication services to the country's largest banks. These are the three main service categories it offers across the nation.
2,30,30,000 new equity shares are being sold in full as part of BLS E-Services' IPO. The parent company of the corporation, BLS International Ltd., has reserved 10% of the shares, or 23,03,000 equity shares, for its shareholders. These shareholders would receive a discount of Rs. 7 per share during the bidding process. BLS International owns a majority share of over 93% in the company.
Before its initial public offering (IPO), BLS E-Services raised Rs 126 crore from anchor investors by allocating 93.27 lakh shares to ten funds, which included Minerva Ventures Fund, Astorne Capita, Aidos India Fund, Sixteenth Street Asian Gems Fund, Saint Capital Fund, Silver Stride India Global Fund, Aries Opportunities Fund, Ebene Global Opportunity Fund, and Aidos India Fund. Through its technology-enabled platform, BLS E-Services offers state and provincial governments across Asia, Africa, Europe, South America, North America, and the Middle East visa, passport, and other citizen services. It is the only Indian listed business operating in this field.
As of March 31, 2023, BLS E-Services' merchant network has expanded to 92,427 in order to better serve the underserved and unserved masses in remote places. As of June 30, 2023, the company employed 3,071 people in total, including 2,413 contract workers.
For the quarter that ended on September 30, 2023, BLS E-Services recorded revenue of Rs 158.05 crore and a net profit of Rs 14.68 crore. For the fiscal year that concluded on March 31, 2023, the company recorded sales of Rs 246.29 crore and a profit of Rs 20.33 crore.
15% of the net offer will go to non-institutional investors (NIIs), with the remaining 75% of the net issue reserved for eligible institutional bidders. The remaining ten percent of the shares will be set aside for the issue's retail investors.
Kfin Technologies is the registrar for the BLS E-Services IPO, while Unistone Capital is the only book running lead manager. The company's shares will be listed on the BSE and NSE, with a tentative listing date of Tuesday, February 6, 2024. The following comments regarding BLS E-Services' IPO are from host brokerage firms:
Reliance Securities
Rating: Subscribe
Additionally, BLS E-Services has a proven track record of making successful acquisitions to expand its service offerings and product line, as well as to reach new markets and allied industries. Reliance Securities stated, "We think the issue offers strong growth due to its strong parentage, asset-light business model, and strong tailwinds. As such, we recommend subscribe'."
Anand Rathi Research
Rating: Subscribe for long-term
According to Anand Rathi Research, BLS E-Services has an asset-light business model with numerous cross-selling and up-selling opportunities, network effect, and a wide reach for customer acquisition. It also has a business model with diverse revenue streams, minimal costs associated with acquiring and retaining customers, and senior management with experience.
"With a market capitalization of Rs 1,226.5 crore following the issuance of equity shares and a return on capital employed of 30.62%, the company is valued at a P/E of 60 times at the upper price band. It said, "We recommend subscribing for a long term rating to the IPO because we think the company's valuations are fairly priced."
Swastika Investmart
Rating: Subscribe
As a provider of digital services, BLS E Services may benefit from government initiatives aimed at promoting digital India. The business has a broad customer base, runs on an asset-light business model, and has a variety of revenue streams. According to Swastika Investmart, the company's financials have likewise shown steady development.
"There are a few issues: first, the company's short working history makes it challenging to assess its operations and growth; second, a significant portion of its revenue comes from a single customer; and third, the company's geographic concentration. Ultimately, it appears to be fairly priced at a P/E of 44 times, thus after taking into account all the variables, we rate this as "subscribe," the report stated.
Canara Bank Securities
Rating: Subscribe
BLS-E Service is a digital service provider that provides almost all related services under one roof and has a single point of contact. Considering the 'digital India' objective of the government, this company's future looks incredibly promising. According to Canara Bank Securities, revenue is growing at a 94 percent CAGR starting in FY21.
"ROE and ROCE continue at 33.33 percent and 30.62 percent, respectively, despite 8.36 percent net profit margins in FY23. The P/E ratio of the company is 44.70 times. It stated, "We advise subscribing for long-term gains and listing gains.
Ventura Securities
Rating: Subscribe
BLS E-Services is a technology enabled digital service provider, providing business correspondents services to major banks in India, aided E-services; and E-Governance services at grass root levels in India, says Ventura Securities. Given the company's growth prospects and solid fundamentals, "it is valued at P/E of 16.4 times," the subscriber stated.
In addition to a variety of business-to-business (B2C) services for residents in urban, semi-urban, rural, and remote areas, BEL's robust network offers access points for the delivery of vital public utility services, social welfare programmes, healthcare, financial, educational, agricultural, and banking services for governments (G2C) and businesses (B2B).
StoxBox by BP Equities
Rating: Subscribe
According to StoxBox, BLSe's recent acquisitions have improved both its top and bottom lines, and the company has more acquisitions planned, so these trends should continue. According to StoxBox, BLS E-Services had the most revenue increase in H1FY24, rising by 50.8%, and the highest average EBITDA and PAT margins, coming in at 33.8% and 18.2%, respectively.
Regarding values, the PE ratio is appropriate when compared to industry rivals, standing at 33.1 times the annualized FY24E EPS. It stated, "We give the issue subscribe rating for the issue based on the positives discussed."
Disclaimer: Finance Outlook India does not offer investment advice; the news it covers about the stock market is provided solely for informative purposes. It is recommended that readers get advice from a licensed financial advisor prior to making any investing decisions.
