MPS Ltd

While, filter is well justified, can you point out specific instances where you thought the management was ‘arrogant’?

I remember an instance a few quarters back where Rahul seems to have told a shareholder that he was not forced to be a shareholder of the company. This incident obviously didn’t go down well with me, but I mostly considered it as a one-off, as post that management has been open and honest (you can see some decisions wrt capital allocation, dividend where they are open to suggestions from shareholders). Also, they are happy to discuss the performances in detail (even this quarter explaining why they fell short of the guidance).

Disclosure: Invested from lower levels

1 Like

Two soft instances from Q2Fy24 call:

  1. The way Rahul flaunted that he became CEO at a young age of 31 and then followed this by over-emphasis on this pedigree, being a alumni from Wharton & Harvard. It sounded un-necessary to talk about this to answer the point around evolution of the mgmt, company.

  2. The way he flaunted that their PAT target of 130 cr in FY24 is a done deal (& it was supposedly a extremely conservative guidance, which now they may even miss) & how they have over-delivered wrt guidance in the past. Also, he went on to entice the investor to extrapolate the guidance based on their past. Mgmt needs to be humble in my view. In a business, nothing is certain given so many known, unknown variables to be managed. To me it was a sign of over-confidence, arrogance.

Note: This is my own personal way of assessing leadership both within my organization as an employee and as an investor. Hence others may have completely contrary reading of such instances.

6 Likes

Management has done a laudable job of integrating and driving to growth all the businesses bought in last few years. Delay and customer decisions do impact business and has to be taken as known risk. Having an aspirational growth plan is a directional plan. Revenue projections and risk is blended in Management/ Analyst projections and aspirations. Dividend yield and growth has been decent for the current valuation.

1 Like

@ap1990
MPS Q3 numbers were clearly disappointing, more so as the mgt. had needlessly upped the guidance just a qtr ago. The numbers themselves were not that bad, with operating margins getting better despite the set back in the e-learning business. I guess the mgt too has learned its lessons & will hopefully, going forward, let their numbers do the talking! I guess the the pressure of having concalls after every quarterly numbers also gets to the mgt whose enthusiasm to please shareholders can sometimes get the better of their judgement! The mgt. though has stayed committed to their vision 2027 of 1500 crs, & hope to actually achieve it before time with similar margins.

I am of the view that the mgt. is well meaning & have by & large walked the talk over the last 7-8 qtrs, which is a sufficiently long time. I also believe the the mgt. has the wherewithal & ability to grow inorganically by successfully acquiring companies & then integrating them. That is what will create shareholder value in the long run. It matters less that the vision 2027 is realised 2-3 quarters behind schedule but the journey forward should clearly show a pattern in that direction.

The Co. is generating free cash flows of about 130-150 crs annually. Has given a interim dividend of Rs. 30/-, & could easily give another similar final dividend (I think the mgt has mentioned something to this effect in the previous concall, admittedly to be taken with a pinch of salt!) That would make the stock give about a 4% dividend yield.

I feel any meaningful correction from current levels of about 1490 could present a decent buying opportunity & I will look to add.

Disc: Invested

20 Likes

Had noticed the same arrogant streak in Rahul A. He has told shareholders multiple times that they can sell out which is not a mature statement. But there have been arrogant business leaders who have been successful - e.g. Steve Jobs. Also the business model of the company is a bit strange - it is basically acquisitions. There is no real organic growth in the company. But what works is that they are ambitious, good governance and lots of cash flows

3 Likes

Same statement different perception. I take it as we are focused on business and not on stock price. As a investor you have a choice to shift your money where you feel you get better proposition.

1 Like
2 Likes

Question regarding the latest acquisition of AJE:.
Does AJE have any debt that MPS is going to takeover?
I did not see any info on the debt on the books of AJE.

YES, No announcement!!!

But acquisition is good case study and how AJE + AJO business will be coming in line with MPS margin.

1 Like

https://www.ndtvprofit.com/research-reports/mps-aje-acquisition-deepens-content-capabilities-b2c-access-do
Dolat_Capital_MPS_Company_Update.pdf (498.5 KB)
lat-capital

2 Likes

Q4 Concall;
Question : What white spaces do you still see now on those three verticals we operate and where we’re trying to get more acquisitions? We have a full book of products. Now the only thing is that we have to scale up. And you are contradicting that. You are saying that we still can go for more acquisitions or whether they will be bolt-on acquisitions or whether they will be in the same area just to ramp up the scale?

Answer by Rahul Arora: More than most, yes. I would not say from a capability standpoint we possess everything… There are still opportunities for capability expansion that allow us to move up/down the value chain. So we’re looking at those types of opportunities.We’re looking at opportunities that expand our geographic reach as well. For example, in FY’24, we expanded into Australia, New Zealand, as well as in China. There are still regions like, the Middle East as well as Latin America that we’re not currently very strong in. Also, certain parts of Europe where we’re not very strong. So there’s a geographic play that we’re looking at as well.
We are also looking to actively accelerate the education space. Today in the education space, a bulk of our revenue comes from K-12 as well as through publishing and our goal is to scale that into higher ed and specifically within higher ed within adult learning and educational institutes. So there’s still much juice left for us to acquire in terms of capability expansion, geographic expansion, as well as adjacent market expansion. So we’re looking at all three sectors.