MPS is a good long term investment

MPS is a good long term investment

By Rajiv Kapoor | 30 January, 2016

MacMillan India, currently named MPS, is a 43-year-old company operating in the publishing knowledge process outsourcing (KPO) space. It has an interesting portfolio of software platform development services, content production for books and journals, digital, media and BPO services. The company is a pioneer in publishing services partnering large international publishing companies in the science-technical-medical (STM) and educational sector. MPS’ digital services business collects its revenues from consumers who increasingly want their content to be available on multiple platforms and devices. Half of its revenue is generated from the US while the balance comes from Europe and the UK. It operates from production facilities in Chennai, Bangalore, Delhi/NCR and Dehradun employing over 3,000 people. There is a change happening across the globe with reading expected to transform from physical book reading to digital and online reading thereby, benefiting companies like MPS. There are many advantages to companies like MPS such as logistic and printing costs coming down, delivery system and access getting faster, easier and more convenient. The company is expected to grow at over 10% CAGR in the future as increased outsourcing work from global publishers towards India will keep the top line and profit margin in good stead. It has reduced its operating costs by shifting business from expensive locations to an impressive 2,000 seat facility in Dehradun thereby, consolidating its facilities and reducing corporate overheads. The management is also confident of maintaining the higher margin growth going forward due to all these positive factors. Companies like MPS would benefit immensely and see fantastic volume growth in the years to come. Fundamentally, MPS is on a very strong wicket with an impressive earning per share of Rs 33 on Rs 10 face value. Solid book value of Rs 136 and an attractive dividend yield of 3.50% make MPS a good value Buy for long term. The company has also recently announced a third interim dividend of 80% and investors can purchase the stock at the current market price of Rs 650 with a price appreciation of over 50% in the next one year. Equity markets staged a smart recovery on Friday making market men wonder whether the correction is really over. After a disastrous January, the new February series of futures and options started on an extremely positive note with the Sensex closing 401 points up at 24,870 and the Nifty advancing 138 points to close the week at 7,563 levels. The market may run up towards Nifty levels of 7,600/7,700 on the back of short covering and pre-budget rally in the immediate short term. It is a traders market at present where speculative players can trade lavishly in the broad range of 7,300-7,600 Nifty levels to make profit.

Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.

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