MPS Q1 Review - Results Miss, However Growth Confidence Remains Intact: Dolat Capital

Dolat Capital Report

MPS Ltd. reported revenue growth of 21% (our estimate 23%) largely due to softness in eLearning. Content/Platform/eLearning saw a revenue change of +15%/+56%/-0.8% QoQ. Organic growth was flat QoQ. OPM declined by 590 bps QoQ owing to integrated related costs.

Despite weak profitability in Q1, MPS is confident and remains optimistic about FY25 growth strategy and foresees potential in delivering 25%+ profit after tax growth (implies 39% YoY growth in profit after tax for 9MFY25) driven by strengthened market positions, increased order pipelines, and operational improvements across segments.

Following a miss in Q1, we have scaled down our FY25/FY26E earnings estimate by 4.1%/2.7% but remain optimistic on the stock given the strong outlook for coming years.

We revise our rating to ‘Accumulate’ with a target price of Rs. 2,430 (implies 24 times on FY26E earning per share).

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