Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- BLS International Services Ltd (BOM:540073, Financial) reported its highest-ever financial performance in Q2 and H1 FY25, with a 21% increase in consolidated revenue to 495 crore.
- EBITDA grew by 89% to 164 crore, and profit after tax surged 78% year-on-year to 146 crore.
- The company experienced a 41% year-on-year increase in visa applications processed, from 7.2 lakh to 10.1 lakh applications.
- The acquisition of IDA contributed significantly to financial strength, adding 60 crore in revenue and 26 crore in EBITDA.
- The transition from partner-run centers to self-run models has enhanced the company's margin profile, with EBITDA margins expanding to 33.1% in Q2 FY25.
Negative Points
- The digital business segment reported a decline in revenue from 86 crore in the same quarter of the previous year to 77 crore in Q2 FY25.
- Despite strong growth in the visa segment, the digital business remains competitive and has not shown the desired growth.
- There is a seasonality in the business, with Q2 and Q3 typically having lower revenues compared to Q4 and Q1.
- The geopolitical environment, particularly in regions like Russia, continues to impact outbound traffic and business volumes.
- The company faces challenges in fully integrating and realizing synergies from recent acquisitions, which may affect short-term margins.
Q & A Highlights
Q: The visa and consular business has shown significant growth, but the digital business is lagging. What challenges are you facing, and are there plans to divest this segment?
A: Nikhil Gupta, Managing Director, explained that the digital business is more competitive, and there are no plans to divest it. They see growth opportunities in this space despite the challenges. Shikhar Aggarwal, Joint Managing Director, added that a major contract ended last year, impacting revenue, but growth is expected from new acquisitions.
Q: How are the recent acquisitions, like IDA, performing, and what impact will they have on future financials?
A: Amit Sudhakar, CFO, stated that IDA is expected to contribute 10-15% growth annually. The integration of IDA's facilities with BLS operations is expected to improve margins further in the coming quarters.
Q: What impact does the current geopolitical environment have on your business?
A: Shikhar Aggarwal noted that while geopolitical issues can affect specific regions, BLS operates in over 70 countries, which mitigates the impact. The company has seen increased volumes compared to 2019, except in regions like Russia where outbound traffic is still recovering.
Q: Can you explain the shift from a partner model to a self-managed model and its impact on margins?
A: Amit Sudhakar explained that the shift to a self-managed model has improved margins due to higher control over operations and reduced revenue sharing with partners. This transition, along with higher application prices and acquisitions, has contributed to margin expansion.
Q: What is the outlook for revenue growth and margins in the coming quarters?
A: Amit Sudhakar mentioned that revenue growth is expected to be higher due to new acquisitions and organic growth. The company aims to maintain its current EBITDA margins, with potential for further improvement as synergies from acquisitions are realized.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
