Latest news with #MPSLtd
Economic Times
5 days ago
- Business
- Economic Times
Nitya Shah on financial azaadi: How to build self-reliant portfolio in today's markets
Nitya Shah, smallcase Manager and Co-Founder of KamayaKya, shares his insights on achieving financial azaadi by blending long-term investing discipline with India's growth story. From identifying sectors powering Aatmanirbhar Bharat to avoiding costly investing mistakes, he outlines a practical roadmap for building a self-reliant portfolio that thrives in today's fast-changing market environment. ADVERTISEMENT From your perspective, what does 'financial independence' mean for investors today? Which sectors today best represent India's march toward economic self-reliance (Aatmanirbhar Bharat)? In today's fast paced world, 'financial independence' would mean the ability to have excess emergency funds which can cover all your expenses and those dependent on you, for at least a year. Having minimal debt, passive income from dividends, interest, rent and long term equity exposure as per your goals and risk taking appetite are some common attributes to financial independence. Sectors that best represent Aatmanirbhar Bharat: electronics manufacturing (EMS sector), defence & aerospace, railways, industrial capital goods, speciality chemicals, pharma and food the KamayaKya smallcase, most of our manufacturing and asset heavy exposure is tilted towards India centric businesses as visibility and forecasting of earnings is more certain. For exports, we prefer asset light, service based or very specialised kinds of manufacturing. Some holdings that represent this are: MPS Ltd, VA Tech Wabag Ltd, Ramco Systems Ltd. Looking at the ongoing tariff policies, low growth, rising inflation and labour costs globally, we feel India-centric companies deserve a significantly higher allocation. This approach has led us to be one of the best return generators on a one and two year horizon on smallcase. ADVERTISEMENT Unlock 500+ Stock Recos on App Avoiding leveraged trading, F&O, stock tips which are more narrative driven than data driven and complex products are some ways of mitigating permanent erosion of capital. Focus should be towards long term investing and allocating higher capital in times of panic selling led drawdowns. SIPs are a good instrument for retail investors to begin with. It is important to note that savings and not your income, should be invested. ADVERTISEMENT To celebrate Independence Day for retail investors, they can invest in index linked funds/ ETFs or flexi cap mutual funds that give them overall exposure to the India story. Those with higher risk appetite can allocate to small-cap funds too. Investors should be mindful of not investing into theme-based funds which have already overperformed with expensive multiples, as this could lead to years of underperformance due to time correction or de-rating of valuations. Chasing discovered themes which are headlining newspapers would be futile to long-term returns. Invest in what you think is relatively undiscovered and could be trending in the near future. Markets are forward looking and always discount or factor in news flow. ADVERTISEMENT Patience & consistency: stay invested for the long term, absorb short term falls and believe in the principle of and reliability: read audited financial statements, official news and do not rely on tips and try keeping an emergency corpus and have low debt. This will allow you to hold on to your investments instead of making a fire sale during panic. ADVERTISEMENT Unity in diversity: do not over allocate into one stock or one sector, diversification is said to be the only free lunch in finance. (Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
5 days ago
- Business
- Time of India
Nitya Shah on financial azaadi: How to build self-reliant portfolio in today's markets
Nitya Shah, smallcase Manager and Co-Founder of KamayaKya, shares his insights on achieving financial azaadi by blending long-term investing discipline with India's growth story. From identifying sectors powering Aatmanirbhar Bharat to avoiding costly investing mistakes, he outlines a practical roadmap for building a self-reliant portfolio that thrives in today's fast-changing market environment. Edited excerpts from a chat: From your perspective, what does 'financial independence' mean for investors today? Which sectors today best represent India's march toward economic self-reliance (Aatmanirbhar Bharat)? In today's fast paced world, 'financial independence' would mean the ability to have excess emergency funds which can cover all your expenses and those dependent on you, for at least a year. Having minimal debt, passive income from dividends, interest, rent and long term equity exposure as per your goals and risk taking appetite are some common attributes to financial independence . Sectors that best represent Aatmanirbhar Bharat: electronics manufacturing (EMS sector), defence & aerospace, railways, industrial capital goods, speciality chemicals, pharma and food processing. How do you strike a balance between supporting domestic industries and leveraging global opportunities? In the KamayaKya smallcase, most of our manufacturing and asset heavy exposure is tilted towards India centric businesses as visibility and forecasting of earnings is more certain. For exports, we prefer asset light, service based or very specialised kinds of manufacturing. Some holdings that represent this are: MPS Ltd, VA Tech Wabag Ltd, Ramco Systems Ltd. Looking at the ongoing tariff policies, low growth, rising inflation and labour costs globally, we feel India-centric companies deserve a significantly higher allocation. This approach has led us to be one of the best return generators on a one and two year horizon on smallcase. What's the investing equivalent of the 'freedom struggle' for today's retail investors? Avoiding leveraged trading, F&O, stock tips which are more narrative driven than data driven and complex products are some ways of mitigating permanent erosion of capital. Focus should be towards long term investing and allocating higher capital in times of panic selling led drawdowns. SIPs are a good instrument for retail investors to begin with. It is important to note that savings and not your income, should be invested. How can investors symbolically celebrate Independence Day through their portfolios while also making sound financial choices? To celebrate Independence Day for retail investors, they can invest in index linked funds/ ETFs or flexi cap mutual funds that give them overall exposure to the India story. Those with higher risk appetite can allocate to small-cap funds too. Investors should be mindful of not investing into theme-based funds which have already overperformed with expensive multiples, as this could lead to years of underperformance due to time correction or de-rating of valuations. Chasing discovered themes which are headlining newspapers would be futile to long-term returns. Invest in what you think is relatively undiscovered and could be trending in the near future. Markets are forward looking and always discount or factor in news flow. What investment principles from India's independence struggle can be applied to modern-day portfolio management? Patience & consistency: stay invested for the long term, absorb short term falls and believe in the principle of compounding. Trust and reliability: read audited financial statements, official news and do not rely on tips and rumours. Self-reliance: try keeping an emergency corpus and have low debt. This will allow you to hold on to your investments instead of making a fire sale during panic. Unity in diversity: do not over allocate into one stock or one sector, diversification is said to be the only free lunch in finance. ( Disclaimer : Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Mint
02-06-2025
- Business
- Mint
This small-cap has already gained 1,000%. Can AI fuel its next leap?
MPS Ltd has quietly turned into a market outperformer. The company's shares have surged over 50% in the past year, delivering returns that have far outpaced the BSE Smallcap Index's 11%, on the back of a string of strong quarterly performances. It has posted consistent growth in both revenue and net profit over the last four quarters, helped by its content solutions business. But the story runs deeper. The stock has delivered a staggering 1,000% return over the past five years, turning early investors into big winners. Also Read: FMCG stocks face margin pressure. Here's why The company's strategic alignment with long-term trends transforming the global learning and content ecosystem has catapulted the stock into a league of its own, far beyond what earnings growth alone can explain. So, what's driving this rally? And more importantly, can the company sustain the momentum as it targets the next phase of growth? In the sections that follow, we break down MPS' growth drivers, emerging opportunities, and the challenges the company must navigate as it aims for its ambitious FY28 revenue target. We also examine how it is leveraging artificial intelligence (AI) to sustain momentum and what that means for investors going forward. 50-year-old legacy meets innovation For the uninitiated, MPS is a business-to-business learning and platform solutions company powering education and research for companies. It has over five decades of experience in publishing outsourcing, three decades in eLearning, and 25 years in platform innovation. It is a combination of various leading institutions: Macmillan (1970), Tata Interactive Systems and an independent platform (Stanford, 1995). It is also present in 15 countries, with key markets being North America, Europe, Middle East, India, and Asia Pacific. Today, the company operates across three core segments namely content, platforms, and eLearning with content contributing over 50% to its revenue. In the content segment, the company offers comprehensive solutions from content creation and development to editorial, design, and production. It serves some of the world's leading publishers, learning companies, corporate clients, libraries, and aggregators via this segment. Also Read: This textile star's rally masks a margin meltdown. Should investors be worried? In the platform segment, it offers configurable SaaS products that support the entire content lifecycle. MPS has established itself as a pioneer in this space with a suite of robust platforms, including DigiCorePro, Insight, Impact Vizor, Sigma, Scolaris, THINK, and Mag+. These tools help clients manage complex content workflows efficiently and at scale. In the eLearning segment, MPS provides cutting-edge, custom learning solutions such as web-based tutorials, simulation and game-based learning, AR/VR modules, microlearning nuggets, motion graphics, and consulting services. From distressed buys to growth-focused deals Inorganic growth has been a significant growth driver for MPS in the past decade. The company has made seven acquisitions over eight years, with the largest being the acquisition of AJE (American Journal Experts) in 2024. It has also allowed it to reduce its revenue concentration to the top 10 customers from 75% in fiscal year 2014 to less than 50% by 2025. However, as most of these acquisitions were not very profitable initially, the company did not derive enough value from them until 2020. The company has recently reconsidered its acquisition strategy. It plans to shift from acquiring distressed assets to acquiring growing entities that can contribute to the profitability quickly. A key filter in this new approach is alignment with AI and technological innovation, ensuring that acquired companies bring in strategic AI capabilities that complement MPS's long-term roadmap. The company intends to maintain a standard run rate of one or two acquisitions every year in FY26 and beyond, which are not expected to require equity fundraising. To stay prepared for any large acquisitions, the company has secured an enabling resolution for fundraising via qualified institutional placement (QIP). This provides optionality for pursuing transformative deals in the ₹300-700 crore range and allows the company to pursue deals it might not have been able to finance solely through internal accruals and comfortable debt levels. High growth, healthy margins underscore MPS' strong five-year run Over the last five years, MPS has exhibited a strong turnaround in its financial performance on the back of an increase in demand for its services. The company's revenue has grown at a CAGR of 17%, more than doubling from ₹332 crore in FY20 to ₹727 crore in FY25. Net profit also has grown in tandem, rising from ₹60 crore to ₹149 crore over the same period, showcasing consistent profitability. Margins have shown a steady improvement as well. Operating profit margin of the company has grown from 24% in FY20 to 29% in FY25, reflecting better cost efficiencies and improved scale. Similarly, net profit margin has risen from 18% in FY20 to consistently stay above the 20% mark. This improved profitability is reflected well in its return ratios. The company's return on equity (RoE) stands at a robust 25.9% as of FY25, indicating a sharp enhancement in shareholder value creation. Return on capital employed (RoCE), also is significantly high at 35.3%, supported by the company's lean capital structure. On the balance sheet front, MPS has maintained a strong foundation. The company's borrowings have remained minimal, indicating a deliberately debt-light strategy. At the same time, it has judiciously expanded its asset base. Fixed assets have grown from ₹115 crore in FY20 to ₹346 crore in FY25, indicating significant capital investment. The company has also paid consistent dividends to shareholders. Also Read: Strong domestic demand, firm steel prices to keep SAIL in focus MPS' 4-year average dividend payout ratio stands at 73%, indicating that the company returned a significant portion of its profits to shareholders, while its 4-year average dividend yield stands at 3.7%. While the yield has moderated to 2.92% in FY25, this has been largely due to rising share prices rather than lower payouts. The stock is also on the radar of super investors. As per the latest shareholding pattern data, investor Mukul Agrawal holds a 4.5% stake in MPS, underscoring institutional and high-net-worth interest in the company. Tapping into a $600 billion opportunity with AI at the core The content industry is currently experiencing powerful structural tailwinds driven by the rising adoption of AI/ML technologies and automation. With the opportunity pegged at $600 billion, the scope for growth is vast, particularly for players such as MPS. To capitalize on this opportunity, the company is positioning itself as a frontrunner in digital learning by embedding AI at the core of its business strategy. Areas such as real-time translation, intelligent language editing, content generation, and accessibility services are already seeing strong demand, and MPS plans to capitalize on these trends by broadening its portfolio of AI-enabled solutions. Its research and development hub, MPS Labs, is at the forefront of this effort, leveraging AI, machine learning, natural language processing (NLP), and cloud-based technologies to develop tools that support the entire content lifecycle. It also plans to launch a dedicated AI and data practice unit by FY26. This unit will deliver market-facing, AI-driven solutions and is expected to function as a parallel revenue engine, reinforcing MPS's long-term growth strategy. Management remains confident that these AI-driven initiatives will scale meaningfully in the years ahead. MPS' vision for FY28 While being a market leader in the $600 billion digital learning and content solutions space may seem far-fetched for MPS at this stage, the company has set its sights on a more near-term, yet ambitious goal—reaching ₹1,500 crore in revenue by FY28. Management views this target as well within reach, given the vast opportunity the sector presents. At the heart of this roadmap is the company's "Going Gestalt" strategy. The strategy is an integrated, principle-driven approach designed to unlock synergy across its business segments and make MPS greater than the sum of its parts. To achieve its targets, MPS is relying on several strategic growth levers. The company is targeting an organic growth rate of 10–12%, supported by focused investments in new capabilities and expansion of high-potential accounts. It also plans to focus on expanding Strategic Customer Partnerships (STAR accounts), with a goal to increase the number of STAR accounts to 100 by the end of FY25. This strategy is expected to bring significant progress in organic growth and margins. Product innovation is another critical focus area. In 2025, MPS plans to launch enhanced versions of its SaaS offerings to further boost its recurring revenue base. Finally, the company plans to pursue its updated acquisition strategy that extends its geographic footprint and market presence. Priority regions include India, the Middle East, Australia, China, Brazil, and South Korea. The acquisition of AJE is expected to play a significant role in accelerating progress toward the company's Vision FY28. What could derail the momentum? While MPS has delivered strong growth over the last five years, several structural challenges remain. The company faces client concentration risk as it derives all its revenue from the publishing industry, with a significant portion coming from its top five clients who contribute around 36% to the company's total revenue. This heavy dependence on a few clients increases its vulnerability to contract losses or budget cuts. Additionally, it also faces concentration risk with respect to geographies. A large chunk of the company's revenues comes from specific geographies (45% from North America and 28% from the UK/Europe). Any economic slowdown in these regions could materially impact performance. There is already a slowdown underway in the US and Europe, with projections pointing to weak or very weak growth in 2025. This could weigh on the company's financial performance. The IT industry, too, is facing headwinds across several key areas including hiring, revenue growth, and discretionary spending which could further impact business momentum. Conclusion MPS has quietly transformed itself from a niche content player into a high-growth, high-margin digital solutions company. Over the past few years, it has steadily scaled its capabilities across digital learning, AI-driven platforms, and enterprise solutions. For investors with a long-term horizon, the stock presents a compelling bet, offering a rare combination of profitability and innovation-led growth. However, valuations appear stretched. The stock is currently trading at a price-to-earnings (P/E) ratio of 31x, nearly double its 10-year average historical P/E of 16.4x, suggesting that much of the optimism may already be priced in. Investors should be mindful of the risks, as any slowdown in growth or external headwinds could lead to sharp price corrections given the high valuation. Ayesha Shetty is a research analyst registered with the Securities and Exchange Board of India and a certified Financial Risk Manager. Disclosure: The author does not hold shares in any of the companies discussed. The views expressed are for informational purposes only and should not be considered investment advice. Readers should conduct their own research and consult a financial professional before making investment decisions.
Yahoo
17-05-2025
- Business
- Yahoo
MPS Ltd (BOM:532440) Q4 2025 Earnings Call Highlights: Strong Revenue Growth and Strategic AI ...
FX-Adjusted Revenue Growth: 32.7% year-on-year for FY25. EBITDA Growth: 24.1% year-on-year for FY25. Revenue from Operations: INR726.89 crores for FY25. EBITDA: INR210.9 crores for FY25. Q4 Revenue: INR182.2 crores, 21.69% year-on-year growth. Q4 EBITDA Margin: 30.76%. Content Solutions Revenue Growth: 30.5% in Q4, 34.4% for FY25. AJE EBITDA Margin: 21.7% for FY25. eLearning Division Q4 Margin: 20.93%. Platform Business Revenue Growth: 39.3% in Q4, 67.4% for FY25. Dividend Recommendation: INR50 per equity share. Warning! GuruFocus has detected 2 Warning Sign with BOM:532440. Release Date: May 16, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. MPS Ltd (BOM:532440) achieved significant financial growth in FY25, with a 32.7% increase in FX-adjusted revenue and a 24.1% rise in EBITDA. The company's Content Solutions segment recorded a 34.4% revenue growth for FY25, driven by strategic acquisitions and strong journal business performance. The eLearning division improved its margins to 20.93% in Q4 FY25, showcasing operational efficiency and strategic execution. The platform business, branded as HighWire, saw a 67.4% revenue growth for FY25, highlighting successful integration and market leadership. MPS Ltd (BOM:532440) has a diversified revenue stream with North America contributing 45% and APAC 30%, reducing customer concentration risk. The company experienced a slowdown in the corporate business segment, impacting overall organic growth. There is a notable increase in working capital requirements, affecting cash conversion and operating cash flow. Despite strong revenue growth, the company faces challenges in maintaining consistent organic growth across all segments. The eLearning business has seen slower-than-expected revenue growth, although margin expansion continues. The company is considering potential equity fund raising through QIP, which may dilute existing shareholder value if executed. Q: How should shareholders interpret the recent resolution for fundraising through QIP, given the previous strategy of funding acquisitions through internal resources, debt, and equity in that order? A: Rahul Arora, CEO, explained that the QIP resolution is an enabling measure, intended to be used only if an extraordinary acquisition opportunity arises that could significantly advance MPS's strategic goals. The company remains committed to its original funding strategy, with equity as a last resort, and the resolution allows MPS to be prepared for large-scale opportunities without scrambling for financing. Q: What impact could AI have on margins in the medium to long term, and have there been any changes in client conversations regarding AI? A: Rahul Arora, CEO, noted that AI is seen as a margin expander, particularly in the research business where machine learning has already improved efficiencies. AI discussions are now a staple in client meetings, and the eLearning sector is expected to see significant gains. Archana Jayaraj, COO, added that AI is enhancing productivity and quality, leading to improved margins. Q: What is the company's approach to acquisitions in light of AI advancements? A: Rahul Arora, CEO, stated that MPS is focusing on targets that are adopting AI and technological innovation. The acquisition playbook now includes data-driven diligence and prioritizes targets aligned with AI-enabled transformation. The company avoids acquisitions that lack AI integration or show signs of potential disruption. Q: How is MPS addressing the slower growth in the eLearning business, and what is the outlook? A: Archana Jayaraj, COO, explained that the focus has been on margin expansion through operational efficiencies. The eLearning business is expected to see a 20% revenue expansion from Q2 FY26 onwards, driven by new logos and increased deal sizes. The company is in the final stages of consolidation, which will support future growth. Q: Can you provide insights into the competitive landscape and MPS's market potential within the $600 billion market size? A: Rahul Arora, CEO, acknowledged the vast market potential but emphasized focusing on MPS's growth trajectory. The company aims to reach INR1,500 crores in revenue by FY28, leveraging its capabilities and strategic acquisitions. The competitive landscape includes larger players, but MPS is confident in its value proposition and growth strategy. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
