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This post should only be viewed as part of a general discussion and in no way is a buy/sell/hold recommendation on any company. In this post only questions arising out of an event are posted and no conclusions are meant to be drawn. This should not in anyway be taken to draw any conclusion or build any investment/divestment decision.
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Hi Ram,
There are some questions that are puzzling me post Q3FY15 numbers of MPS :
(1) Completely agree with Hitesh on proposed QIP and contradictory move to pay good dividend but here I can somewhat understand the position of the management since if you donât declare dividend then it will mean reversal of DD policy which will be taken badly by the market and therefore stock valuation can suffer and so fund raising could be in jeopardy. However, what is more disappointing for me is not the proposal to raise funds (which I expected anywayand I disclosed it too in my reply to P Sharma 2 months before)but the route itself as it would have been better if it was a private placement to some sort of strategic investor like PE who could help the company in scaling up.
(2) Q3 results are a real disappointment for me on all fronts and themanagement explanations thereafter are confusingâŚits historically stated by the management that q3 is the best quarter because of year-end issues with publishers and they completing all pending projects fast to book revenues in that quarterâŚnow, in this best quarter we have cc revenue growth of only 4.5 %âŚtwo explanations I am completely not satisfied with :
)ââlast Q3FY14 was a big quarter so the base was higher and so the growth looks mutedââŚthen what about Q3FY13 and Q3FY12 when there was a cc degrowth of -5.88 % and -4.49 % respectively as also what about Q2FY15 when we had a cc growth of 14 % vs Q2FY14 cc growth of 1.33 %
)ââwe need to look at consolidated nos. rather than standalone nos. for growthââŚthen what about the acquisitionsâŚwe have paid price for the acquisitions and although its better to look at consolidated nos., but, when we need apple-to-apple comparison it is best when looked at l-t-lâŚin 2HFY14 Element contributed 9 cr. to revenues but Q3FY14 figures were reported standaloneso if Q3 is the best qrtr. for the group then a 4.85 cr. contribution from Element (after deducting 1.66 cr. contribution from EPS) also seem a flat growth YoYâŚ
Why the organic value growth is not coming for the company (cc 8 % growth for 9 mths.FY15) when comparable scale peers in the Industry are growing handsomely at 20 % + and that too organicallyâŚmanagement transition phase seems already over so where is the hitchâŚare the contracts not coming to the company or there is substantial price discount given so value is not reflecting itâŚthen isnât the same pricing pressure over the heads of its peers too then how come they are able to report healthy value growthâŚ??
(3) There was an indication in the concall of addition of ~160 employees at Dehradun in Janâ2015 month so does it meananything regardingQ4 ??
Management seems good, has acted in most transparent manner so far and has kept shareholdersâ interest on the top of mind so farâŚindustry itselffrom peers performance seems good and although company is slipping fast every year in the top 10 ranking still company enjoys good scale in an otherwise scattered industryâŚbut inorganic growth strategy seems good to an extent and organic growth has to start somewhere that is my personal beliefâŚ
Rgds.
Discl.- Invested Mildly
This post should only be viewed as part of a general discussion and in no way is a buy/sell/hold recommendation on any company. In this post only questions arising out of an event are posted and no conclusions are meant to be drawn. This should not in anyway be taken to draw any conclusion or build any investment/divestment decision.
