Buy MPS; target of Rs 300: Dolat Capital

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26 Aug, 2025 12:21

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Dolat Capital's research report on MPS

MPS reported weak Q4FY20 results, with a 9.0% QoQ and 15.6% YoY decline in revenue (our estm: 1.3% QoQ growth), largely led by QoQ decline of 15% and 19% in Platform and E-Learning business. OPM contraction of about 480bps QoQ to 12.7%, (our estm: 19.8%) primarily due to sharp absolute revenue fall off directly impacting EBIT. Content solutions revenues fell 3.0% YoY in Q4 but expects positive momentum hereon as it has started rampup of a large deal won in the quarter (potential Top10 client in FY21; volume is 4-5x than its existing large client but pricing is discounted) and also witnessed enquiry for digitalization by laggard clients (volume for research has gone up).

Outlook

While MPS have moved to Quarterly commentary due to uncertainty, we believe large deal provides visibility in near term (expects flat revenues for Q1FY21) and should drive recovery through the year. Given the attractive valuations and strong cash generation profile, we maintain our Buy rating with TP of Rs300, valued at 8x FY22 PER.

For all recommendations report, click here

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