There are several reasons why one can invest in this company for long term:
1) Company is owned by Nishith Arora who bought this comapny from Macmillan at 36 rs per share and CMP is 600 Rs per share in just matter of 5 years. He has impeccable  track record of inorganic acquisitions. He buy companies at very distressed valuations and turns them around creating value for his shareholders. Company has done QIP during peak of 2015 at almost 836 Rs per share and is sitting on 150 Cr cash for inorganic acquisitions opportunities. But its Nishith Arora, he wont buy unless he gets deal at his valuation.
2) Company is virtually debt free.
3) Company has good consistent profit growth of 49.85% over 5 years
4) Company has a good return on equity (ROE) track record: 3 Years ROE 37.11%
5) Company has been maintaining a healthy dividend payout of 61.50% of Net profit giving almost 3% dividend yield. Nishith Arora’s strategy is clear he either buys company from quartery profits or distributes the profit through dividends 🙂
Marquee investors like HDFC and Goldman Sachs have invested in this company in recent QIP. They have acquired shares at 836 rs per share. You are getting discount to buy the stock at CMP 600 rs per share 🙂
I just watched the future of the Magazine. It is mouth watering. Take a look before going forward.Mag+’s version of the magazine
Acquisitions of this sort can be big game changers. Bonnier spend over 125 crores developing this project and MPS bought it out at 23cr and has the team along with it. These moves are ones that we should really be focusing rather than being petty and noticing differences in margins over small periods of time.

Management of MPS is of highest integrity and you can hear it all through their quarterly concalls:
Q4 FY17 Notes
MPS – Q4 FY17
Margins suppressed due to losses in Magplus. Co believes that this is the last quarter of loss in MagPlus. Reasons for this belief is cost reduction in MagPlus and increase in revenue
Unfavourable currency also impacted margins 
Acquired Think Subscription- small acquisition however critical in the customer architecture
Focus is increasing margins in H1 FY18, followed by some pleasant developments in H2 FY18
Acquisition framework looking at Scope deals – related business, allied geography, bigger businesses which are profit making
Nishith Arora continues to perform the role that he was doing , just a formal announcement
Stopped dividend in order to look at bigger deals.
After acquisition of MagPlus have been looking at our business differently. From publishing vertical, now expanded the market scope to enterprise content. 
Organic growth in this market seems to be limited. So essentially growth is in-organic growth. Once the company is acquired and then integrate organic growth is single digit to early double digit growth 
Short term goal is to get back to high 30 kind of EBITDA margins. Laser like focus. 
Longer term goal is still committed to the INR 400 Crores target by FY18. However not stressed at all, even if we miss it by a 2-3 months
223 Crores of Cash as of FY17
Think Subscription 
o Small transaction, however strategic implication is huge. 
o Has 45-50 Customers – customers are in the scientific, medical and technical publishing domain. Also some magazine publishers
o Essentially the company has software tools which help these publications to manage subscription – order management, customer support, payments, etc
o Short term strategy – optimize cost structure- Q1. Already started 
o Expose MPSs customers to Think Subscription platform and also do vice-versa with penetrating MPS into THink’s Subscription. 
o Customer overlap is minimal. 1 customer
o Think Subscription – margins are lower than MPS
o Goal for all SaaS business is to run them at better margins than MPS
Top 10 customer base growth
o Couple of customers where there have been price cuts in lieu of longer term commitments. The ramp up in volume is yet to happen
o Longer term growth opportunities still remain in top 10 clients
o Started to look at building growth momentum in Top 25 accounts 
One of the biggest challenges in this industry is to build customer relationships. 
MagPlus is in a tricky situation. Adobe’s solution DPS is sunsetted now. MagPlus is # 2 solution
MagPlus restructuring charges ~ 4.1 Crores. Bulk of other expenses increase is MagPlus. 
Reaching 400 Crores would not be margin dilutive
Not much deals happening in this space. We are in a lucky position where we can command the price. EBITDA multiples 3-5x in this space.
Very tough to grow organically in this business. Entry barriers are extremely high 
Co has been able to develop new areas of outsourcing. Something only a mature player can do

LEAVE A REPLY

Please enter your comment!
Please enter your name here