MSTC

MSTC reported a mixed financial performance for H1 FY25. Standalone revenue decreased by 18.98% YoY to INR 179.27 crores, with standalone PAT declining by 26.18% YoY to INR 83.48 crores. However, consolidated total PAT saw an increase of 11.65% YoY to INR 118.29 crores. This consolidated growth was largely attributed to a significant 142.9% increase in PAT from discontinued operations (FSNL), while PAT from continuing operations declined by 10.81% YoY to INR 80.70 crores.

The divestment of MSTC's 100% subsidiary, Ferro Scrap Nigam Limited (FSNL), is progressing as planned. The Share Purchase Agreement (SPA) was signed on October 24, 2024, and the transfer is expected to be closed within 60 business days from this date, likely by January 15, 2025. Management stated that internal meetings and a board meeting would be held to deliberate on the utilization of the sale proceeds, after accounting for advanced tax payments to the government.

The e-commerce segment, a core revenue driver, experienced a decline in H1 FY25, with revenue falling by 9.18% YoY to INR 168.04 crores. Specifically, e-auction and e-sale revenues were down by 15.63% YoY to INR 120.31 crores. Management attributed this degrowth to a fall in scrap prices in the market and the loss of business from key clients like the IBAPI portal (public sector banks) and Coal India. The marketing segment also saw a slight decline of 2.27% YoY to INR 11.20 crores.

MSTC is actively pursuing several new projects to diversify its revenue streams. These include managing the FM width radio wavelength allocation, a digitization project for Kendriya Police Kalyan Bhandar (KPKB), and e-auctions for timbers from the Chhattisgarh Forest Department, all expected to commence in Q3/Q4 FY25. The company also secured an exclusive scrap sale agreement with BPCL's marketing division, estimated to involve around INR 100 crores in annual scrap value, with revenues expected from Q4 FY25. Additionally, MSTC is expanding its NPA listing portal to rural, cooperative, and private banks, and plans to set up Infrastructure as a Service (IaaS) in FY26, alongside developing an ERP for the mineral sector.

Management addressed competition from the government's GeM portal, stating that while GeM is mandatory for standard procurement, MSTC differentiates itself with end-to-end services for high-value and complex auctions, where its scrap business remains stable. For NPA properties, MSTC acknowledges competition from the PSB Alliance platform developed by public sector banks but expressed confidence in its 'competent and transparent' bidding platform. In IaaS, MSTC aims to target small and medium government organizations and MSMEs, leveraging its existing client relationships and data security confidence against larger private players.

Management characterized the current period as a 'transition phase,' acknowledging that it would take 'another quarter or so' for revenues from new projects and initiatives to start coming in. Despite the current degrowth in core e-commerce, the company is positive about the potential of its new ventures, including the BPCL contract, expanded NPA portal, and IaaS, to drive future revenue growth. MSTC aims to leverage its specialized experience and established client base to overcome competitive pressures and market challenges^🌐.