BLS International Services Limited — Q4 FY25 earnings call

As we have explained in the past quarters also, because we have done a lot of efforts, in some countries the transition from partner-led model where we had some partners, operational partners, we are now completely operating on our own. Service fee has increased, conversion of different services have improved, increase in prices have come. So a lot of factors have led to this growth. This level will be sustainable in the future in the Visa & Consular business.

Analyst sought clarity on the drivers and future sustainability of the significant margin expansion in the core business, which management confirmed as sustainable due to operational shifts and pricing power.

Asked by Yogesh Anand

So Gaurav, that is because as we have been talking in our earlier investor calls also that we have changed our model, now it is a self-run model, as we have taken offices on our own and we have our own people rather than a partnership model. So where the commission used to be paid in the cost of services, now we have our own employees and the rentals and the location administration costs, all are being paid by us. Therefore, there's an increase in the other expenses, whereas if you see the cost of services are coming down. Overall, the margins are improving.

Analyst questioned a material increase in 'other costs', and management clarified it's a reclassification of expenses due to the strategic shift from a partner-led to a self-managed model, ultimately leading to improved overall margins.

Asked by Gaurav Srivastava

So I think, first of all, we've got an increase in our service fee also in many countries. And as you see a lot of tenders QCBS bids, we are getting higher technical marks. So, our service fee per application is also increasing. So definitely, there is a mix of factors for increase. And right now, our target is to maintain that. Now how much further we can go, we cannot give you exact number. But definitely, we strive to improve it every year.

Analyst probed the sustainability of the high net revenue per application, a key revenue driver, and management indicated continued efforts for improvement, suggesting further upside.

Asked by Varun Subramanian

If you see last year, we've done INR 1,000 crores plus acquisition and we're also a dividend paying company. This year also we have paid 100% dividend on the face value we have announced. So I mean, this is a cash-generating company. It's a negative working capital business. And as we grow, we generate more amount of cash. We are seeing effective ways of utilization. Acquisition was one. Dividends we've been paying. We are investing on different resources, growth of the company, getting good quality people, spending some on technology, capex, etc. So going forward, I think the growth that we foresee in terms of new contracts coming in, etc., some cash will be utilized in that. We are reinvesting in improving our offices, technology, etc. And also, we are again open once the acquisitions that we have done, the synergies properly kick in, we are open to more acquisitions in the future as well.

Analyst questioned capital allocation strategy given the large cash balance, and management outlined a multi-pronged approach including M&A, dividends, and internal investments for growth.

Asked by Anuj Jain

Correct. So China, the volume is almost, not 100%, but it's almost back to pre-COVID level. We have seen a good growth in terms of our revenue from China. And we've also transitioned to our own model there. So that is why you must have seen an entity incorporation or something. So we have a strong footing.

Analyst sought an update on a key geographical market (China) and the impact of the self-managed model, confirming strong recovery and positive revenue contribution.

Asked by Sachin

I think there's no specific numbers, but what we can tell you is that we have achieved EBITDA growth of 80% from last year and 20% of that growth has come from our acquisitions, but more than 60% has come from organic. So it's only 20% growth that has come because the full year numbers have not captured the full year numbers of these acquisitions. ... So if you look at Aadifidelis, we have about INR 200 crores of revenue in the current financial year. ... Aadifidelis has an EBITDA of around 4% to 5%.

Analyst requested specific financial details for recent acquisitions, and management provided revenue and margin for Aadifidelis and clarified the overall organic vs. inorganic contribution to EBITDA growth.

Asked by Manish Choraghe