BLS E-Services' Rs 310.91 crore-initial public offering (IPO) opens for subscription on Tuesday, January 30, 2024. The company is offering its shares in the range of Rs 129-135 apiece with a lot size of 108 equity shares and multiples thereof. The bidding for the issue will continue for three-days and conclude on February 1. BLS-E Services was incorporated in April 2016. It is a digital service provider that offers business correspondence services to major banks in India, assisted E-Services, and E-Governance services at the grassroots level in India. They are the three key categories of its services in the country. The IPO of BLS E-Services is entirely a sale of 2,30,30,000 fresh equity shares. The company has reserved 10 per cent shares or 23,03,000 equity shares for the shareholders of BLS International Ltd, its parent company, who will get a discount of Rs 7 per share during the bidding process. BLS International holds more than 93 per cent stake in the company. BLS E-Services mobilized Rs 126 crore from anchor investors ahead of its IPO as it allotted 93.27 lakh shares to ten funds at Rs 135 apiece including Sixteenth Street Asian Gems Fund, Saint Capital Fund, Silver Stride India Global Fund, Aries Opportunities Fund, Aidos India Fund, Ebene Global Opportunity Fund, Minerva Ventures Fund, Astorne Capita and Leading Light Fund VCC. BLS E-Services provides visa, passport, consular, and other citizen services to state and provincial governments across Asia, Africa, Europe, South America, North America, and the Middle East through its technology-enabled platform. It is the only listed company engaged in this domain in India. The merchant network of BLS E-Services had grown to 92,427 in order to serve the underserved and unserved populations in hard-to-reach areas as of March 31, 2023. The company has a total of 3,071 employees, including 2,413 contract employees as of June 30, 2023. BLS E-Services reported a net profit of Rs 14.68 crore with a revenue of Rs 158.05 crore for the period ended on September 30, 2023. The company clocked a bottomline of Rs 20.33 crore with a revenue of Rs 246.29 crore for the financial year ended on March 31, 2023. The company has reserved 75 per cent of the net issue for the qualified institutional bidders, while 15 per cent of net offer shall be allocated towards non-institutional investors (NIIs). Remaining 10 per cent of the shares shall be reserved for the retail investors of the issue. Unistone Capital is the sole book running lead manager of the BLS E-Services IPO, while Kfin Technologies is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE with February 6, 2024 (Tuesday) as the tentative date of listing. Here's what a host brokerage firms say about the IPO of BLS E-Services:Reliance Securities Rating: Subscribe "BLS E-Services has also a successful track record of acquisitions enhancing its product portfolio and service capabilities to enter into complementary businesses and enter new geographies. We believe with strong tailwinds, asset light business model, and strong parentage offers strong growth, therefore we recommend a 'subscribe' to the issue," said Reliance Securities.Anand Rathi Research Rating: Subscribe for long-term BLS E-Services is having an asset light business model with multiple cross-selling and up-selling opportunities, network effect and wide reach for customer acquisition and a business model with diverse sources of revenue and negligible customer acquisition and retention costs along with experienced senior management, said Anand Rathi Research. "At the upper price band, the company is valuing at P/E of 60 times, with a market cap of Rs 1,226.5 crore post issue of equity shares and return on capital employed of 30.62 per cent. We believe that valuations of the company are fairly priced, hence we recommend a 'subscribe for long term' rating to the IPO," it added.Swastika Investmart Rating: Subscribe BLS E Services is a digital service provider, and it could be a beneficiary of digital India initiatives by the government. The company operates on an asset-light business model, has a wide reach for customers, and has a business model with diverse sources of revenue. The company has also reported consistent growth in its financials, said Swastika Investmart. "A few concerns are that the company has a limited operating history, making it difficult to evaluate its business and growth; secondly, it is dependent on a single customer for major revenue; and third, it has geographical concentration. Finally, it is valued at a P/E of 44 times, which seems fairly priced, so considering all the factors, we give a 'subscribe' rating to this," it said.Canara Bank Securities Rating: Subscribe BLS-E Service is a digital service provider with a single point of contact that offers nearly all associated services under one roof. Taking into account the government's 'digital India' initiative, this company has extremely promising future prospects. From FY21, the revenue is increasing at a 94 per cent CAGR, said Canara Bank Securities. "Even with 8.36 per cent net profit margins in FY23, ROE and ROCE remain at 33.33 per cent and 30.62 per cent, respectively. The company’s P/E is valued at 44.70 times. We recommend to subscribe for listing gains and long-term gains," it said.Ventura Securities Rating: Subscribe BLS E-Services is a technology enabled digital service provider, providing business correspondents services to major banks in India, assisted E-services; and E-Governance services at grass root levels in India, said Ventura Securities. "It is valued at P/E of 16.4 times," said with a subscribe rating considering the growth opportunities in the company and strong fundamentals. Through its robust network BEL provides access points for delivery of essential public utility services, social welfare schemes, healthcare, financial, educational, agricultural and banking services for governments (G2C) and businesses (B2B) alike in addition to a host of B2C services to citizens in urban, semi-urban, rural and remote areas, Ventura' IPO note added.StoxBox by BP Equities Rating: Subscribe StoxBox believes that BLSe’s top and bottom lines are attributed to its recent acquisitions, and the trends will continue with more acquisitions planned. BLS E-Services witnessed the highest revenue growth of 50.8 per cent, with the highest Ebitda and PAT margins at an average of 33.8 per cent and 18.2 per cent respectively in H1FY24, said StoxBox. Turning to valuations, the PE ratio stands at 33.1 times based on the annualized FY24E EPS which appears reasonable compared to peers in the industry. Based on the positives discussed, we give the issue a 'subscribe' rating for the issue, it said.
Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
Also read: Why Bajaj Finance shares fell 5% post Q3 results? Here are fresh stock price targets