Unravelling the BLS eServices Limited IPO

On the bustling Indian market stage, the BLS eServices Limited IPO comes with much excitement. This blog deciphers the company's business model, evaluates its market performance and analyses the investment potential it offers.

Key Takeaways

• BLS eServices is a technology-enabled digital service provider for major banks, offering business correspondent services, assisted e-services, and government e-governance services.
• Their revenue is mainly generated from monthly commissions, transaction-based commissions, and registration fees.
• The company promises organic and inorganic growth opportunities via technology infrastructure strengthening, new store openings, and strategic acquisitions.

Understanding the Core Business Model

BLS eServices is best described as a technology-enabled digital service provider that functions as business correspondents for major banks in India, especially in semi-urban, rural, and remote areas.

Here's a quick rundown of their three core services:

1. Business Correspondent Services: They act as intermediaries between banks and people in remote places, performing services like opening savings and recurring deposit accounts, cash deposits, cash withdrawals, remittances transfers, etc. Their revenue comes from monthly commissions, transaction-based commissions, and registration fees.

2. Assisted e-Services: This includes a variety of services like point of sale services, ticketing services, and assisted e-commerce services. Examples could be booking a railway ticket or making an order on Amazon for someone who doesn't have a smartphone or access to these services readily.

3. Government e-governance Services: This caters to needs like changes in Aadhar or PAN card details, issuing of birth certificates, death certificates, property registrations, and the likes.

Financial Health and Market Performance

Revenue figures have shown an increasing trend with a solid CAGR of 55.63%. The PAT (Profit After Tax) CAGR stands at 86.2% with the EBITDA CAGR at 87.87%. However, the EBIDA and PAT margins are on the lower side, standing at 4.73% and 8.36% respectively, as of fiscal year 2023.

The company is characterized by strong parentage, experienced senior management and skilled employees. However, it also carries certain risks, including its reliance on a single PSU bank that accounted for 59.47% of their total revenue as at FY 2022-23.

IPO Details

The IPO is set to open at a price band ranging from INR 129 to INR 135. It's entirely a fresh issue worth INR 310.10 Crores with a 10% offering to retail individual investors. Specifically, the capital raised will be used to boost the company's technology infrastructure, organic growth in form of opening new BLS stores and facilitating inorganic growth through strategic acquisitions.