BLS E-Services IPO subscribed 7.5x on Day 1 so far; Retail portion booked 25.5 times

The initial public offering (IPO) of BLS E-Services received a strong response from the investors during the first day of the bidding process, across all categories of investors. The issue, which had kicked-off for bidding on Tuesday, January 30 was heavily bid during the initial few hours.

The New Delhi-based BLS E-Services is selling its shares in the price band of Rs 129-135 apiece with a lot size of 108 shares and its multiples thereafter. The issue is entirely a fresh sale of up to 23,0,30,000 equity shares. The company is looking to raise a total of Rs 310.93 crore via IPO.

According to the data, the investors made bids for 10,30,83,624 equity shares, or 7.52 times, compared to the 1,37,02,904 equity shares offered for the subscription by 13.35 pm on Tuesday, January 30. The bidding for the issue will continue for three days and conclude on February 1, Thursday.

The allocation for retail investors was subscribed 25.53 times, while the portion reserved for non-institutional investors saw a subscription of 11.10 times. However, the quota set aside for qualified institutional bidders (QIBs) attracted bids for 2.06 times and the portion reserved for BLS International shareholders was booked 1.27 times as of the same time.

Incorporated in April 2016, BLS-E Services 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.

Brokerage firms are mostly positive on the issue citing its strong financial performance, asset light model, deep rooted network in the pan-India market and service sector nature of the business. However, rich valuations and rising competition are the major drawbacks for the IPO.

BLS E-Services has exhibited strong financial performance, with FY23 revenue reaching Rs 243.06 crore and a PAT of Rs 20.33 crore. It is involved in various initiatives, such as launching a service portal, establishing a data center, and creating BLS stores, It intends to invest in research, sales, marketing, and customer support to tackle stiff competition, said Arihant Capital.
 

"The company is currently limited to operations in three states and anticipates a gradual expansion into multiple regions due to increased competition. At the upper band of Rs 135, the issue is valued at an EV/EBITDA of 26.04 times based on FY23 EBITDA of Rs 33.06 crore and P/E of 44.7 times based on FY23 EPS of Rs 3.02," it added with a 'neutral' rating on the issue.

Ahead of its IPO, BLS E-Services raised Rs 126crore from 10 anchor investors as it allotted 93.27 lakh shares to ten funds at Rs 135 per shares. The IPO allocates 75 per cent of the offer to qualified institutional bidders (QIBs), with non-institutional investors receiving 15 per cent, and the remaining 10 per cent allocated to retail investors.

Considering the FY-23 EPS of Rs 2.24 on a post-issue basis, the company is going to list at a P/E of 60.33 times with a market cap of Rs 1,226.6 crore, whereas its peers namely EMudhra is trading at a P/E of 57 times, said Marwadi Financial Services. "We assign a 'subscribe' rating to this IPO as the company has an asset-light business model with diverse sources of revenue and negligible customer acquisition and retention costs." it said.
 

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 at the bourses. 

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