@Mahesh Mahesh

Just want to acknowledge your early work in MPS.
The competitive data that you had put up brought a lot of perspective for the early investors into MPS. You were he one who pointed to different margins at play among the bigger players, and other such data painstakingly put together.

Guys, if you give importance to this type of work at VP, please go back in this thread, and provide big-thumbs up (add your Likes) to that specific post that really stands out even today when you go back and browse the thread, among others

My perspective is that MPS is well known as a brilliant turn-around story in the last 2-3 years. What is interesting is that it could well be in the "Global Sweet Spot" that Management paints in 2015 AR (we should ignore the sleekly hyped up parts by Kolkata based AR expert, but not IGNORE the facts either)

Having said that, let me re-iterate for the benefit of newbies at VP
Do not start salivating at Mahesh's well-meaning comments either, no matter how much you respect anyone's work/contribution . Don't think the Verdict is out in the open. I wouldn't venture such adjectives as NO-BRAINER or mouth-watering prospects with some fixed multiples like EV/EBITDA or Acquisition track record, just yet. Can't be as simple as that, can it. As Hitesh has astutely observed A lot depends on how the Management walks the Talk in the next 2-3 years; how it executes, especially on acquisition front - that can make or break it - Ticket sizes are much bigger 10x last times - one can't help overemphasise.

The endeavour from here should be to dissect - Is it really in a Global Sweet Spot? Really? Why or Why not? Lets focus on that.

Let's ask tough questions on Business Quality. Sustainability of Competitive advantage for a Long Time, Can someone dislodge it from its perch? What all can go wrong?? Predictability of the Revenues/Profitability, Can it be a consistent performer over 3-5-10 years, why or why not? A lot lies on the answers to the above questions - Valuations will reflect that.

Disc: I am invested, as disclosed in the Management Q&A post. Very small allocation 2 years back. Having set the contours of the business that MPS operates in, I now find it has very little operational challenge, or disruptive competition, or Customer pressure. Everything works to its advantage, unlike many other quality businesses, It's quite free to keep executing. Much of my confidence is an ACT of FAITH ...The story can play out differently, if execution falters

Everyone - As influencers in this discussion/debate don't forget to add your disclaimers. Its a MUST. Also Like to remind we need similar disclosures if & when you exit, within reasonable timeframes.

Minutes of concall (note - had to be in/out of concall due to some work)

1. Volume grew marginally by 4% y-o-y
2. USA plant has broken-even
3. Company is enjoying gross margin expansion due to crude price fall. Gross margins for H1 FY2016 have been 62%. However, historically gross margins have been ~52%, which is also very appreciable
4. Nylon 66 plant commenced operations. Full year sales from Nylon 66 is expected to be ~INR 15 cr. hence, contribution to H2 FY2016 is INR 7.5 cr. 2 shipments already made till date
5. RM/sales ratio is USA ops is 30% implying gross margin from USA plant of 70%!! RM/sales ratio from India ops has been ~50% over last decade!
6. For H1 FY2016, India capacity utilized = 4700 TPA and USA capacity utilized = 1900 TPA
7. Training manpower in USA ops is creating delay in USA plant's ramping up
8. Guidance for FY2016 sales of INR 350 cr. and PAT of ~INR 46 cr.

Great job ayush and rohit.

Two documents give most of the insights one needs to have about the business and management.

A few things which come across are;

If the trend of outsourcing continues and accelerates in the industry, (currently at 2-3%) then there could be a huge addressable market. By getting into relationships with the biggies, MPS is ensuring that if and when the market opportunity explodes, it is there with all the right armaments to tap the opportunity.

After reading the book OUTSIDERS, and looking at the things MPS management did, it gives me a de javu feeling.
Turning around an ailing business, effective utilisation of cash (high dividend payout), dilution when the time is right to build a warchest for potential acquisitions etc point to a very astute management. It has till now had a stellar track of wealth creation and could continue to do so.

The economic characteristics of this company are fantastic. All it needs is some strong organic growth and a few smart acquisitioins. How these things pan out would decide the kind of returns generated hereon.

It put was for " Kitex garments " analyser considers " Colgate "

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