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Emkay
MPS (Accumulate)
CMP: ₹617.65
Target: ₹680
MPS Ltd’s Q3FY18 performance was affected by continued sluggishness, owing to delayed project starts at clients’ end. The company expects the delayed ramp-up to impact performance in Q4FY18 as well.
Management is confident about the long-term prospects of the Content business, as it continues to win new deals as part of clients’ vendor consolidation exercise (leveraging low pricing as a differentiator) and robust potential to mine existing customers in new areas of outsourcing.
Platform business continued to witness business loss, driven by conscious internal strategic rethink, as MPS is exiting several non-profitable deals in the acquired Mag+ business.
We believe that once MPS resolves the aforementioned issues, it would be in a position to deliver strong double-digit organic growth in FY19E, which along with its efficient cost management would drive OPM gains.
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