Introduction:
The Indian IPO market has been a hotbed of activity in recent times. Several promising companies have launched their Initial Public Offerings (IPOs), which have given substantial profits to investors. Another company – BLS E-Services Limited – will hit the primary markets on January 30, 2024. The company is one of the biggest digital services providers in India.
BLS E-Services IPO will comprise a fresh issue of approximately 2.3 crore equity shares worth Rs. 311 crores. The public issue will open for subscription on Tuesday, 30 January 2024 and closes on Thursday, 1 February 2024. Continue reading to learn more about BLS E-Services IPO, including price band, lot size, grey market premium, and more.
About BLS E-Services Limited
Established in April 2016, BLS-E Services Ltd functions as a subsidiary of BLS International Services Ltd. The latter boasts a widespread global presence, offering a diverse range of services and standing as a major player in visa application outsourcing on a global scale. The company serves as a digital service provider specialising in delivering Business Correspondence services to prominent banks in India. Additionally, it provides Assisted E-Services and E-Governance Services at the grassroots level across the country.
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BLS E-Services Limited also functions as a Business Correspondent, acting on behalf of banks by offering a range of banking products and services. This includes tasks such as opening savings and recurring deposit accounts, handling cash deposits and withdrawals, facilitating remittance and transfers, and providing bill collection services. These services are carried out through its subsidiaries, namely Zero Mass Private Limited (ZMPL) and Starfin. Currently, the company's merchants are categorised into two groups: BLS Touchpoints and BLS Stores. As of September 2023, there are a total of 98,034 BLS Touchpoints, which encompasses 1,016 BLS Stores.
Key Strengths of the Company
A company’s strengths provide insights into its future growth potential. Below are the key strengths of BLS E-Services Limited as reflected in the Red Herring Prospectus (RHP):
- An asset-light business model increases the profit-making potential of the company
- The company has numerous opportunities for cross-selling and up-selling, benefiting from a network effect and leveraging its extensive reach to enhance customer acquisition
- The company generates its revenue from diversified sources. It does not depend on a single business
- The expenses associated with customer acquisition and retention are notably minimal for the company
- Boasts strong promoters and an experienced management team
- The company has an agreement with the National e-Governance Division to incorporate agent-assisted delivery of Unified Mobile Application for New-age Governance (UMANG) services into its digital platform
Key Risks or Weaknesses Highlighted
The risks associated with a company can deter its sustained growth. The key risks or weaknesses associated with BLS E-Services Limited include:
- The company derives a major portion of its revenue from its subsidiaries – ZMPL and StarFin. A deterioration in the performance of these subsidies can significantly impact the revenues.
- The company offers its services only in Punjab, West Bengal, and Uttar Pradesh. Unrest in these states may lead to a loss of revenue
- A single PSU bank contributes to over 60% of the revenue. An unfavourable relationship with this bank may hurt the business
- The company required high working capital to operate
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Core Financials of the Company
The financials of BLS E-Services Limited paint a strong picture. The company’s net worth has improved from Rs. 10 crores in FY21 to Rs. 107 crores in FY23. The revenue during the same period has increased from Rs. 64 crores to Rs. 243 crores. The profit after tax increased from Rs. 3 crores to Rs. 20 crores.
The table below illustrates the detailed financials of BLS E-Services Ltd. for the last three years:
| Particulars |
For the Period Ended Sept 2023 |
As of and for FY Ended March 31 |
| 2023 |
2022 |
2021 |
| Share Capital |
156 |
243 |
97 |
64 |
| Net Worth |
120 |
107 |
15 |
10 |
| Total Borrowings |
0 |
0 |
9 |
11 |
| Revenue From Operations |
156 |
243 |
97 |
64 |
| EBITDA Adjusted |
22 |
36 |
9 |
5 |
| Profit After Tax |
15 |
20 |
5 |
3 |
| Earnings Per Share (Diluted) |
2 |
3 |
1 |
1 |
| Return on Equity |
13% |
33% |
43% |
39% |
*Amount in Crores
Source – RHP dates 23 January 2024 on the SEBI website
Details of the IPO
The table below illustrates the crucial details of the BLS E-Services Ltd. IPO:
| IPO Date |
30 January to 1 February 2024 |
| Basis of Allotment |
02-Feb |
| Listing Date |
06-Feb |
| Face Value |
Rs. 10 per share |
| Price Band |
Rs. 129 to Rs. 135 |
| Lot Size |
108 shares |
| Total Issue Size |
Rs. 311 crores |
| Fresh Issue |
23,030,000 equity shares worth Rs. 311 crores |
| Issue Type |
Book Built Issue |
| Listing At |
NSE, BSE |
To conclude
Considering the robust financials and a strong GMP of Rs. 155, BLE E-Services IPO can be a good investment. However, you must also consider your investment goals and risk appetite before investing.
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