MPS Changes Gear and FY15 Updates

MPS has completed another eventful year keeping in line its funda to keep its employee cost at 40% or lesser of the sales value. The standalone business has generated a PAT of 61.44 cr and its subsidiaries have generated 1.62 cr in profit. Very Impressive.

The results can be down loaded from here – http://www.adi-mps.com/Investors/InvestorsOverview.aspx

These are the key takeaways from the con-call:

1. Nishith Arora will be taking a back seat from the day to day operations of the company and as Executive Chairman of the board, he will now be focusing his energies on new acquisitions.
   1. These acquisitions will all be in the publishing space only.
   2. Acquisitions have no time limit and will be based on merit as a business only. He will not be looking at businesses that would take greater than 1-1.5 years to turn around.
   3. While the earlier acquisitions of ELEMENT, TSI Evolve and EPS were made at good price points, they were predominantly businesses that the owners wanted to get out of. No guarantee that the future will also bring about the same.
   4. One must not forget that, Nishith has been quite effective in sniffing out deals with companies that are ready for the picking. MPS till date has probably been his best.
2. Rahul Arora, was in charge of marketing and growing the business last year will be taking over as CEO and will be primed with the responsibility of mining the existing clients and cross selling products from the 3 acquisitions and MPS. Rahul has been educated at BABSON college, one that is specially known for its entrepreneurship programs. Lets hope that the Babson education and the incredible MPS platform are well utilised by him.
3. Nishith for the first time seemed a little less optimistic about the platform business on the con-call. While he seemed to be happy about how the platform has evolved and will benefit MPS in the future, a recent development about the big 5 publishers developing their own platform seemed to have dampened his spirits about selling/leasing his platform to them. Smaller players however still fit the bill for the earlier plans on platform expansion.

MPS has been operating at a ROE of 35% over the last 3 years and at about 49.5% over the last year. This is phenomenal. MPS has a new shopping budget of a 150 cr. If the past is anything to go buy, I’m really excited about what Nishith will buy with his new cash bag.

Interesting times ahead. And as with anything interesting, there will be plenty of ups and downs and one must focus on the general direction rather than the Q on Q results for a little while.

I for one am happy to be on this ride.