BLS International posted muted set of numbers in 4QFY18, but the new contract win from United Kingdom Visas & Immigration (UKVI) with strategic alliance with Sopra Steria (French IT company) is a game changer. The total contract value for BLS is GBP 110mn (Rs 100bn) over three year period with margin of ~22%. The UK contract is bigger than Spain and will start contributing from Oct-18. BLS will open 60 offices (capex of GBP 1mn) in UK and process ~0.5mn visa (renewals) at average realization of GBP 80/application. We have assumed Rs 1.64/3.37bn revenue from UK in FY19/20E.
We like the visa segment which is a lucrative business with huge addressable opportunity, scope for market share gain, asset-light model with higher return ratios. In view of the large UK contract win and growth visibility in visa business, we upgrade BLS to BUY with a TP of Rs 230, based on 20x FY20 EPS. We increase our revenue estimate by 28/54% and PAT est. by 11/30% for FY19/20E. We expect Rev/EBITDA/PAT CAGR of 15/7/13% for FY18-20E.