– MPS Ltd

MPS Ltd

Vivek_Shetty:

hile there may be some shallow cyclicality owing to economic slowdown in the west, the margin fluctuations are likely due to periodic acquisition of margin-dilutive businesses which are then turned around and brought up to speed margin wise. Whether this strategy will continue to work in future, we’ll have to see. There has been some indication of acquiring better quality businesses, so let’s see how that goes.

With a market cap of 1852 crores, a topline of 501 crores, and PAT of 109 crores, the Market Cap to sales is around 3.7, and the PE ratio is around 17. If the QIP happens, it will take the market cap to around 2100 crores, and thus the PE to almost 21. But if they use the capital to make a smart acquisition which adds to the topline and is margin-accretive, then the PE will still be in the high teens. My view is for a debt-free company with an EBIDTA of around 35% and a dividend yield of around 4%, not to mention ambitious growth plans, the valuation seems fair if not cheap,

PE is 17 not 21.7. You need to look at Consolidated numbers and not Standalone
Acquisition is key part of their strategy.
Dividends have been historically good, so that reduces risk of bad capital allocation.
Highwire acquisition seems to have stabilized. So that can now grow.
There is good operating leverage in the Platform business, provided it starts to grow again.
eLearning has been growing very well over last 1-2 years and now has good margins. Management wants margins to be 30%, currently at 25% from this segment.

I made a small entry recently at 1100.

Subscribe To Our Free Newsletter

MPS Ltd

Latest News

News Sources