Nivesh Discovery

June 30, 2014 MPS Limited

Current Previous MPS limited (MPS) is a global player in superior quality publishing solutions
covering everything under the roof of print and digital. It has over 40 years of
CMP : Rs.346 service history as Macmillans back office be it Books & Journals, Magazine
Production, Content Store, Content Hosting, eBook, Interactive Learning &
Rating : BUY Rating : NR Multimedia, Comics and Animations, Data mining and other related services. MPS
Target : Rs.448 Target : NR limited was born out of demerger of Macmillan India under which it engaged in
publishing technology and services business. ADI BPO in 2011 took over
(NR-Not Rated) management control of the company by buying out Macmillans stake in MPS.
Key rationales for accumulating MPS:
STOCK INFO
1) MPS expertises in digital publishing, interactive learning, multimedia and
BSE 532440
creative design handling everything from the production of book, journal or
NSE MPSLTD
Bloomberg MPS IN
magazine to subscription management and BPO services. It offers full editorial
Reuters MPSL.BO and project management services; content conversion and digitization
Sector PRINTING & STATIONERY services; eLearning and creative design; mobile content distribution;
Face Value (Rs) 10 subscription management and back office support services to overseas
Equity Capital (Rs mn) 168 publishing community.
Mkt Cap (Rs mn) 5,762
52w H/L (Rs) 424.45/99
2) Digital technology is rapidly making our world paperless right from kinder
1m Avg Daily Volume (BSE+NSE) 32,370 garden schools to offices which thrive on billions of data being mined every
Source: BSE, NSE India, Capitaline, Company, IndiaNivesh Research
day. MPS has over 42 years of relevant experience with major publishers
worldwide, providing high-quality solutions designed to transform and enrich
content for print, online and mobile media.
SHAREHOLDING PATTERN %
(as on 31st Mar. 2014) 3) It has major client presence in North America and Europe constituting around
Promoters 75.00 50% and 47% respectively of top line, in FY14. Managements focus on diluting
FIIs 0.03 client concentration is progressing well. Total Client base grew at decent pace,
DIIs 0.01 it reached 70 as on 31st March14 from 60 as on 31st March13. For FY14
Public & Others 24.96 around 57% of top line was contributed by top 5 clients and 75% came from
Source: BSE, NSE India, Capitaline, Company, IndiaNivesh Research top 10 clients.
4) As more and more publishers and corporate entities go for digitization, MPS
STOCK PERFORMANCE (%) 1m 3m 12m stands to benefit through its global reach and proven track record. It has
MPS LTD 3 -6 237 sales and service office in North America, Europe and India. Its 7 production
NIFTY 3 13 32 facilities employ over 2,700 people.
Source: BSE, NSE India, Capitaline, Company, IndiaNivesh Research
5) During FY14 MPS acquired the business and assets of Element LLC through
its wholly owned subsidiary MPS North America LLC. The acquisition of
Element, LLC is likely to enhance MPS Limiteds presence in the US
educational publishing market. Element, LLC develops content and products
for learners of all ages in a broad range of curriculum and subjects, specializing
in Pre K and K -12 market.
6) MPS is vendor to noted publishing groups like McGraw Hill Education,
OXFORD University Press, Wiley, CENGAGE Learning, ELSEVEIR and Nature
Publishing Group.
7) The company stands on a strong balance sheet, is net debt free having a
dividend yield of 2.89%. It delivered ROE of 46%; EBIDTA margin of 33.50%
and Net Profit Margin of 21.40% for the year ending 31st March14.
8) Managements strategy of swiftly shifting to new and advanced technology
while tightly controlling cost through adoption and implementation of
Dharmesh Kant continuous cost reduction measures have yielded rich dividends in FY14 where
AVP - Strategies & Fund Manager (PMS) EBIDTA margin improved to 33.50% from 28.51% in FY13 and PAT margin to
21.36% from 19.06% in FY13. Sales registered growth 14.80% over FY13.
Mobile: +91 77383 93372
Tel: +91 22 66188890 9) MPS has seen turnaround in last three years post management control was
dharmeshh.kant@indianivesh.in taken over by ADI BPO. It has been PAT positive during last three years having

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IndiaNivesh 601 & 602, Sukh Sagar, N. S. Patkar Marg, Girgaum Chowpatty, Mumbai 400 007. Tel: (022) 66188800
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 MPS Limited (contd...)

steady revenue growth along with remarkable sequential improvement in

operating margins. MPS is presently available at a P/E multiple of 13.81x (TTM
basis).
10) Assuming in FY15 MPS delivers revenue growth of 15% y-o-y while net profit
margin stands at 24% (same as of Q4FY14), the EPS works out to be Rs 32.
Valuing the company current P/E multiple of 14x for FY15 on aforesaid
assumption the stock target price comes at Rs 448.
We recommend buy and accumulate on MPS for a target price of Rs 448.
YE March (Rs. Crores) REVENUE EBITDA PAT EBITDA % PAT % EPS (Rs.) P/E (x)
FY12A 165.67 24.41 11.05 14.73% 6.67% 6.56 52.74x
FY13A 167.33 47.70 31.89 28.51% 19.06% 18.95 18.25x
FY14A 197.28 66.14 42.14 33.53% 21.36% 25.05 13.81x
Source: BSE, NSE India, Capitaline, Company, IndiaNivesh Research

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Tel: (022) 66188800 / Fax: (022) 66188899
e-mail: niveshdiscovery@indianivesh.in | Website: www.indianivesh.in

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IndiaNivesh Research is also available on Bloomberg INNS, Thomson First Call, Reuters and Factiva INDNIV.