MPS

MPS Limited experienced a soft start to Q1 FY26 with revenue growth at a muted 3.9% year-over-year. Despite this, the company achieved a significant EBITDA growth of 22.51% over the same period. Total headcount increased from 3,007 to 3,263 employees, reflecting anticipated scale-up. Days Sales Outstanding (DSO) improved to 45 days, an achievement management aims to sustain, demonstrating strong working capital management.

The Education Solutions segment was a standout performer, with revenue soaring by 56.64% in Q1 FY26 and an EBITDA margin of 36%. This growth was entirely organic, driven by strategic collaborations. In Research Solutions, revenue saw a small decline due to the intentional rightsizing of AJE, which now operates at an annual run rate of USD12 million with a 23% standalone EBITDA margin, targeting over 30%. Excluding AJE, Research Solutions grew organically by 10-11% with a 40% EBITDA margin. Corporate Learning experienced a 32% volume decline as part of an intentional turnaround, with management expecting revenue growth from Q2.

The Board approved the amalgamation of ADI BPO Services Limited with MPS Limited, a move aimed at simplifying the shareholding structure and enhancing operational flexibility without affecting public shareholding or incurring tax/commercial impact. Additionally, the in-principle approval was granted for transferring MPS Europa AG's shareholding to MPS Interactive Systems Limited, consolidating the Group's eLearning business. The company has a robust acquisition pipeline with 3 deals in advanced stages, targeting companies in Education and Technology with over USD10 million revenue and 15% EBITDA margin, expecting to close some this financial year. Acquisitions will primarily be majority stakes (51-60%) with a payback period of 3-5 years for growth assets, funded by cash accruals and potentially up to INR150 crores in debt.

MPS is leveraging AI primarily to drive operational efficiency, particularly in the Research business, to meet customer demands for faster content production. This has enabled market share gains and margin expansion. In Education, AI is focused on product development and differentiation. The Corporate Learning segment also uses AI for operational efficiency, contributing to improved margins. The company is also exploring new revenue streams through consulting projects on AI implementation and e-learning programs for AI readiness, though these are currently small.

North America's contribution to total revenue bounced back to 51% in Q1 FY26, up from 48% in Q4 FY25, and is expected to settle closer to 60-65%. This region is a key growth driver, especially for the Education business, which benefits from the macro environment in the US higher education sector. The company's overall organic growth, excluding the intentional AJE rightsizing, is estimated at 10-15%, with a target of 20-25% overall growth including inorganic contributions.