BLS Internat.

A concession the state cannot do without

Charlie Munger prized businesses that sit in a spot no one else can easily occupy. BLS International occupies exactly such a spot: it holds the contracts to run visa and passport application centres for governments around the world. An embassy that hands BLS its application process does not switch providers lightly — the contracts run for years, the trust is hard-won, and the work is dull enough that few want it and fewer can do it at scale. It is, in effect, a private concession to handle the paperwork of crossing borders, and BLS is one of the two largest holders of such concessions on earth.

Wonderful economics, and still a fair price

This is the trifecta a value investor rarely finds together. The business is asset-light and earns over thirty paise on every rupee of capital; it has grown profit at nearly seventy per cent a year over five years; and it changes hands at under sixteen times earnings. Munger's "wonderful business at a fair price" is usually an aspiration — here the fair price is actually on the table, after the share fell more than a quarter in a year. One is not paying up for the quality; one is being handed it cheaply.

What to weigh

The cautions are honest ones. The company's tax rate has been low, which flatters profit and may rise, so the earnings deserve a conservative read. The promoters have trimmed their holding somewhat. And a concession business lives on renewals and new wins: lose a big government contract, or see travel volumes slump, and the growth stalls. Acquisitions have fuelled part of the expansion, which always asks whether the price paid was sensible.

What this asks of you

Hold across several years and let a sticky, capital-light, high-return franchise compound — and, unusually, do so without having overpaid to begin with. The risk is contract concentration and earnings that should be weighed sceptically; the opportunity is quality, growth and value arriving in the same package, which almost never happens. This is the kind of holding patience was made for.