MPS hosted a conference call on July 28,2022. In the conference call the company was represented by Mr Rahul Arora-CMD, and Mr Sunil Malhotra-CFO.

Key takeaways of the call

Revenues of the company adjusted for Forex gain loss stood at Rs 114.04 cr in Q1FY2023 as against Rs 117.91 cr down 3.3%. Decline in revenues was due to movement of large K12 project of content business to later part of the year; delay in delivery of a e-learning project from Switzerland facility, which is likely to pick up in Q2FY2023, but majority to come in H2FY2023 and decline in Highwire business which is likely to be soft remaining part of FY2023.

Content business made a soft start for FY2023 due to log sided nature of education business.

However, scholarly business outperformed and is expected to perform in a sustainable way. Revenues from Journal business grew by 15% in Q1FY2023 YoY and operating profit grew by 47% YoY, while scholarly books revenue grew by 8% YoY in Q1FY2023 while operating profit grew by 77% YoY.

MPS interactive is expected to seamless expansion in FY2023. Revenue grew by 15.2%, EBITDA profit was above 30% and order book expanded by 20%. Pipeline for the MPS interactive business is strong and is geographically well diversified.

Platform business declined due to decline in contribution from Highwire business. The company acquired Highwire business in June 2020This is the 3rd year since acquisition and the company expects recovery from Highwire business from 4th year since acquisition.

Cash Balance: Cash balance declined from Rs 182 cr as on Mar 31,2022 to Rs 125 cr as on June 30,2022. This was due to dividend payment(Rs 52 cr), acquisition of E I Design (Rs 42 cr). Some of the dividend pay-out was spilled over to Q2. It also has given an inter-corporate loan of Rs 18 cr.

Acquisition: The company plans to make a couple of acquisition in next 5 years. The company plans to fund its acquisition through internal accruals. If the acquisition is sizable than the company plans to fund it through a mix of debt and equity. E I Design: In FY2022 , E I Design revenue stood at Rs 38.88 cr and PBT at Rs 8.2 cr.

Margins: Decline in operating margins to 25.8% was mainly due to decline in revenues.

The benefit of rupee depreciation should directly go to the bottom line.

Recession: The company is actively monitoring the impact of recession on sales and operations. As of now there is no much impact. There is some delays in educational orders. The company expects that Academic side will pick up during recession as more people will take up higher studies.

Human Resource: The company has around 2900 employees, of which 97% are located in India across 7 locations. In addition, the company has 3 centers located in Europe and 5 in US.

Attrition level for the company has remained at 2-2.5% for many years and it has remained at similar levels for the company. However, for the competitor's attrition is above 3%.

From organization structure stand point, the company has 9 people in senior management level. The company is hiring around 4-5 people every year from ISB. The company has looked at 3 levels to sustain growth and the company has good bandwidth at each level. The company is also exploring ESOP programme which is under discussion and is hopeful to launch the same in current financial year.

Outlook: The company expects to earn profit of over Rs 100 cr in FY2023. Vision 2027: The company expects to earn revenues in excess of Rs 1500.0 cr by 2027 with expanding margins.

The company expects to touch the revenues by growing both organically and inorganically and both is expected to contribute equally.

Content business was earlier growing in single digits, however in the last couple of quarters is growing at double digits. In FY2023 it is expected to grow in double digits and is sustainable. Due to supply chain issue the volume from exiting customers is likely to increase and will also grow due to addition of new customers.

E-learning business is growing at 15-20% organically and can continue to at a CAGR of 15-20% without any new acquisitions.

Platform business is expected to grow at 20% plus with Highwire business recover from the year 4th -5th year.