Dolat Capital Market has given Buy recommendation for MPS with a target price of Rs. 570 in its research report issued on Jan 30, 2021

Dolat Capital Market’s research report on MPS

MPS reported beat with a revenue growth of 5.9% QoQ (DE: 2.6%) largely led by traction in Content Biz. / E-learning Biz. (grew 6.5%/18.6% QoQ) while Platform Biz. remained flat due to decline in Highwire Biz. EBIT improved by 619bps QoQ to 23.2% (DE: 17.5%) led by profitability improvement in Platform Biz. Due to Cost Savings in Highwire (EBITDA: up 1,220bps QoQ to 33.7%) and positive operating leverage impact in E-learning Biz. leading to reduced loss margin (EBITDA: 8.2% from -3.3%). MPS expects improved traction from E-learning segment as work has resumed post pandemic related pause early this year. Profitability in the segment is skewed with India region at double digit EBITDA & Swiss region still under losses. Content Business is also performing well as MPS is gaining market share and it is more confident on the Biz. With profitability improvement playing out across business segments, and revived growth prospects of Content/ E-learning Biz.

Outlook

MPS is well poised for strong financial performance and gradual re-rating of the stock, we maintain our Buy rating with TP of Rs570, valued at 12x FY23 Earnings per share of Rs45.5.

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