BLS Internat.

The clerk who stands in the queue for you

Anyone who has applied for a foreign visa knows the queue — the forms, the biometrics, the waiting room. Governments and embassies do not want to run those counters themselves, so they hire someone to do it. BLS International is one of the two largest such firms in the world: it takes in visa and passport applications on behalf of dozens of governments, handles the paperwork and fingerprints, and is paid a fee for each one. It is a quiet, asset-light business — desks, clerks and software, little else — sitting between travellers and the state.

What makes a value investor look twice is the rare combination on offer: this is both cheap and very good.

Cheap for what it earns

The shares change hands at under sixteen times earnings. That is a modest price in itself — and a remarkable one for a business growing this fast and earning this well. Profits have compounded at nearly seventy per cent a year over five years, sales at better than forty, and the company earns over thirty paise on every rupee its owners have put in — the mark of a genuinely productive concern, not a cheap and tired one. Its own past valuation has been too erratic to lean on, so the case rests on the plain arithmetic: a thirty-per-cent-return, fast-growing franchise for sixteen times earnings is the uncommon pairing the discipline prizes.

The share has fallen by more than a quarter in the past year, which is precisely what has opened the door.

What to weigh

No bargain is without a blemish, and a careful reader notes two. The company's tax rate has been unusually low, which flatters reported profit and may not last; weigh the earnings with that in mind. And the promoters have trimmed their holding over the last three years — not alarming, but worth watching. Beyond the figures, this is a business of government contracts: it lives or dies on winning and keeping them, and on travel and immigration volumes that ebb and flow with the world's moods.

What this asks of you

Hold this across a year or two. The thesis is straightforward, and the kind Graham relished — a highly profitable, fast-growing, asset-light business offered at a price that asks little of the imagination, after a sharp fall. The margin of safety is the low multiple set against the high return on capital; the risk is contract concentration and a tax rate that may normalise. Buy it for the value-and-quality pairing, and let the cheapness, not the recent dip, do the work.