Buy MPS Ltd For Target Rs.3,603 By Sushil Finance
Strategic acquisitions
Historically, MPS Ltd was known for identifying distressed assets available at attractive valuations, acquiring them, and revitalizing their operations through integration, efficiency improvements, and cost rationalization. However, since 2022, MPS Ltd has broadened its lens to include well-managed, high-growth companies. A key driver behind this change has been the company’s increasing focus on future-ready businesses. MPS now classifies acquisition targets as either “core” or “non-core” based on their alignment with emerging technologies, especially artificial intelligence (AI).
Facilitating value via MPS Labs
MPS Labs' innovations have resulted in tremendous efficiency gains in specific implementation areas. The business's cutting-edge AI capabilities are creating new revenue streams in high-growth areas including content creation, real-time translation, accessibility, and intelligent language editing. MPS and its clients share the benefits of AI integration, which has enabled profitable development across company segments.
Notable industry shift
The educational publishing and eLearning industries are undergoing a significant and irreversible digital shift. Traditional printed resources, such as textbooks and physical learning modules, are quickly being replaced by digital-first formats. With attention spans shrinking and learner expectations evolving, companies that can deliver personalized, scalable, and accessible solutions are best positioned to lead. Companies like MPS Ltd. stand to gain a great deal in this setting based on their capacity to optimise learning solutions, platform delivery, and content solutions.
OUTLOOK & VALUATION
Factoring the various positive triggers for the stock in the medium to long term, we expect revenue at Rs.1194.2 cr, EBITDA at Rs.364.2 cr at an EBITDA margin of 30.5% and Adjusted PAT of Rs.256.8 cr. Given the strong revenue and margin outlook, we estimate FY28E EPS at Rs.150.1, and assign a PE multiple of 24x to arrive at a target price of Rs.3603, which is an upside of ~36.8% from its last traded price of Rs.2646. We initiate coverage for MPS Ltd. with a BUY rating, over an investment horizon of 24-30 months.
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