Ajay Relan was part of a team of 15 stock wizards who were roped in by Outlook Business in January 2014. Each stock wizard was asked to pick his favourite stock. Ajay Relan recommended MPS. At that time MPS was quoting at Rs. 186. He said the stock was at a “tipping point”. He gave convincing reasons in support of his logic.
Then, in May 2014, Ruchi Burde & Pritesh Chheda of Emkay carried out a brilliant analysis of MPS in which they confidently asserted that MPS has the “perfect recipe” of high ROE (41%), free cash flows and high dividend payout (50% of profits) and that its MPS’ valuations are “completely out of sync” with future fundamentals.
After that, in June 2014, when the stock price had surged to Rs. 360, Dharmesh Kant of IndiaNivesh picked up the gauntlet and recommended a buy of MPS. He gave ten reasons why MPS is a great buy. He was very conservative with his target price of Rs. 448.
MPS has been living upto expectations by delivering excellent quarterly results. Today was no exception. It delivered block-buster Q2FY15 results.
The consolidated net profit surged 80.2% to Rs 14.11 crore while the total income from operations surged 13.33% to Rs 55.57 crore on a YOY basis. Delirious investors thronged the counter sending the stock rocketing to its upper circuit limit of 20% at Rs. 724. On BSE itself, nearly 89,730 shares were traded as against the average daily volume of 9,163 shares.
On the question whether the stock is still a good buy, we must remember that MPS is still a micro-cap with a market capitalisation of only 1200 crore. Also, we must remember the prophetic words of Ruchi Burde & Pritesh Chheda of Emkay when they said “MPS has the potential for multi-bagger return for investors if the growth story unfolds on expected lines”. So, as I said in my earlier piece “MPS Is A 6-Bagger Stock But It Is Still Not Too Late To Buy It”.