MPS - AJE Acquisition Deepens Content Capabilities, B2C Access: Dolat Capital

Dolat Capital Report

MPS Ltd. announced acquisition of 100% stake in Research Square AJE LLC for a cash consideration of $8.4 million (Rs 700 million) for an implied price/sales of 0.3 times.

Acquisition is aimed at complementing MPS in: -

1. Scaling up AI capabilities,

2. Entry into B2C marketplace,

3. Expansion into China,

4. Value chain advancement and

5. Premier Customer partnership.

The transaction is d at ~0.3 times P/S on CY23 revenue of ~$30 million, which is very attractive as management is confident and have decent visibility on its roadmap to take current early teens Ebitda margins to reach 25-30% levels on FY25 exit basis.

This acquisition reflects the right alignment of MPS’s FY28 vision (to achieve Rs 1.5 billion revenue). Transaction will lead to an uptick in growth prospects, thus driving up our growth confidence and target price to Rs 2120 d at 20 times of FY26E earnings per share (implies just one time on price/earnings-to-growth basis).

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