MPS hosted a conference call on May 19,2022. In the conference call the company was represented by Mr Rahul Arora-CMD, Mr Sunil Malhotra-CFO, Mr John Doherty-Senior Vice President-HighWire and Mr Sukhwant Singh-Chief Delivery Officer.

Key takeaways of the call

FY2022

Revenues of the company stood at Rs 448.9 cr in FY2022 as against Rs 422.6 cr in FY2021 a growth of 6.23%.EBITDA stood at Rs 126 cr as against Rs 107 cr in FY2021 a growth of 18% YoY. EBITDA margin stood at 28.1% in FY2022 as against 25.3% in FY2021. PAT stood at Rs 87.1 cr as against Rs 58.6 cr in FY2021 a growth of 48.8%.

e-Learning revenue grew by 14.4% YoY in FY2022 while segment margin stood at Rs 11.81 cr in FY2022 against loss of Rs 4.58 cr. Revenue quality improved due to recurring customers, premium solutions and deeper connectivity with customers. Customer diversity is much healthier across industry, geography and customer concentration. Apart from revenue growth, the margin expansion is on account of cost arbitrage due to migration of centers to lower cost city centers and tighter control on expenses.

MPS interactive India revenue grew by 14% YoY. PBT grew from a loss of Rs 79 lacs in FY2021 to profit of Rs 10.29 cr in FY2022. MPS interactive PBT margin stood at 35% in Q4FY2022. Margin was attained due to great execution and super collaboration and team work.

Content solutions revenue grew by 8% YoY in FY2022 while segment margin stood at Rs 76.65cr in FY2022 when compared to Rs 72.29 cr in FY2021 a 6% increase in segment margin.

Platform solutions revenue declined by 1.9% due to customer off boarding while segment margin stood at Rs 40.64 cr when compared Rs 39.56 cr in FY2021. The company moved to a balance between offshore onshore model of its employees. The company has consolidated the platform business of HighWire brand.

Employee Cost: The company expects that the employee cost to sustain at current levels. The company has higher proportion of workforce in low-cost cities not only in India but also in North America. Diversity of presence helps the company to optimize employee expenditure.

Europe revenue contribution has increased from 27% in FY2021 to 30% in FY2022 as the company has taken a concious effort to diversify revenue concentration geographically.

The company's business has huge operating leverage and as revenue grows, margins will only expand.

Pricing of platform business: Pricing is based on volume of articles and periodicals and volume of interaction with customers and also project growth of customers. Pricing is very much flexible based on size of customers and volume.

In some business lines like research content and journal production the company is using the price war strategy as the company has low-cost base and is also benefiting due to depreciating currency. In High Wire business the company is using the strategy of undercutting competitors to gain success.

The company has achieved a CAGR of revenue and PBT of 11% and 8% between FY2013 to FY2020 due to significant acquisition play.

The company completed 7 acquisitions in 8 years which has led to decline in revenue concentration from top 10 customers from 75% FY2014 to 53 % in FY2020,

From a complete content business with revenue contribution of 100% in FY2014 to 60% from content business in FY2020 and diversifying into platform and e-learning space in FY2020 and expanded the total Market from US $ 2 billion to US $ 310 million. Revenue and PBT CAGR between FY2020 to FY2022 is 17% and 18% respectively.

Capital Allocation: The company will redefine marketing strategy to drive organic growth and shift the focus from distressed asset acquisition to acquisition of growth assets which are EBITDA positive. The company will acquire growth assets at similar valuation which the company is getting. The company will target companies with revenue of US $ 15-30 million. The company is open to raise debt for acquisition based on specific situation.

Diversification: The company plans to diversify into IT services and Marketing communication in the long term. However, foresees lot of opportunity in the existing line of businesses to grow organically and inorganically in the short term.

Recession: The company's business is not recession proof. However, it will not be impacted as much when compared to other industries and sometimes during recession some people might take up e-learning courses to improve their skill.

Outlook:

The company has budgeted 17% revenue growth for e-learning business however expects to achieve much better in FY2023. In Content business, the company expects same sort of volumes and healthy growth. In platform business the company expects similar run rate in revenue as it was in Q4FY2022.

As a whole business the company plans to double triple its revenues in next few years. The company's order book and pipeline are strong.

Dividend: The Board of Directors have recommended a dividend of Rs 30 per share.