MSTC Limited IPO

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Background of the Company

MSTC Limited is under the administrative control of the Ministry of Steel of MSTC Limited, Government of India, PSU of Mini Ratna category-I The company was established on September 9, 1964, as a regulatory authority for the export of iron scrap. The Government holds 89.85% stake in the company. It was a canalizing agency for importing iron scrap and breaking old vessels until 1992.

MSTC became a subsidiary of SAIL in 1974. In 1982, it got delinked from SAIL and became an independent company under the Ministry of Steel.

MSTC is making rapid progress in e-commerce sector to promote e-governance in all sectors of the economy. MSTC today is rendering its services to steel and petrochemical sectors for raw material support and seamless e-commerce services with an innovative approach to various PSUs, Central Government/State Government and private sector companies. Successful e-auction of coal blocks is yet another feather in MSTC’s cap and MSTC today stands taller than yesterday. It is the most preferred service provider and various Central PSUs, State Governments are engaging MSTC on nomination basis based on its strong credentials.

To promote e-commerce, MSTC has emerged as a major player in the country. Its e-auction portal, www.mstcecommerce.com has become a very popular tool for businesses to transact business transparent and fairly. Portal sellers and buyers provide a virtual market for doing business in metal scraps (iron / non-ferrous), surplus stores, plants and machinery, obsolete parts, vehicles, minerals, forests, and agricultural products, real estate etc.

MSTC has recently also developed an e-procurement portal, which can be adapted to meet customer needs. It has made itself a place to provide customized digital solutions and has emerged as a large e-commerce company in the B2B and B2C area.

New Initiatives

1. e-Commerce in Agricultural and Forest products like tobacco, tendu leaf, timber, etc.

2. e-Commerce in Mineral products like Iron Ore, imported thermal coal, chrome, manganese ore etc.3

3. Recently, MSTC has set up an auto- shredding plant through a JV company with Mahindra Group. This is one of its own kind in India and will go a long way in recycling special grade steels besides substituting imports for such materials.

Subsidiaries/Joint Venture of MSTC

Subsidiary Company – Ferro Scrap Corporation Limited (FSNL) was formed in 1979 as a joint venture company. During 2002-03, FSNL became a 100% subsidiary of MSTC. FSNL is mainly engaged in the recovery of Ferro scrap and reddish iron metal from the slag mugs and debris arising out of iron and steel making in steel plants.

Joint venture company MSTC had set up a joint venture company M / s Mahindra MSTC Recycling Private Limited for the first Auto Shredding Plant in India to convert End Life Vehicle (ELV) and other white goods into a shedding scrap, which is for secondary steel There is important raw material. In the first phase, with the principles of environmentally friendly management, modern technology is being set up in Greater Noida and collection centers are being set up.

MSTC Limited IPO Stock Quote & Charts

120.30

-1.07%

  • Open: 123.90
  • High - Low: 126.15 - 119.20
  • Previous Close: 121.60
  • Total Traded Volume: 10766
  • Updated On: 31-Jan-2020

Objects of the MSTC Limited IPO:

The objects of this Offer are: (i) to carry out the disinvestment of 17,670,400 Equity Shares by the Selling Shareholder in our Company constituting 25.10% of our Company’s pre-Offer paid up Equity Share capital. (ii) to achieve the benefits of listing the Equity Shares on the Stock Exchanges.

MSTC Limited IPO Details:

Open Date: Mar 13 2019
Close Date: Mar 20 2019
Total Shares: 17670400
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Built Issue IPO
Issue Size: 226.18 Cr.
Lot Size: 90 Shares
Issue Price: ₹ 121-128 Per Equity Share
Retail Discount: 5.5 Per Equity Per Share
Listing At: NSE,BSE
Listing Date: Mar 29 2019

Promoters And Management:

The Promoters of the company is Govt. of India.

Company Business:

a) The Business area of MSTC includes selling of agency business, e-sales of scrap and other commodities, e-procurement etc. b) Customized e-commerce solutions have emerged as major innovative business models of MSTC. They have developed Exim Portal for Petroleum Industry, Online Draw System for selection of LPG dealership, e-RaKAM (e-Rashtriya Kishan Agri Mandi) Portal etc., to name a few. c) E-auction of sand Mining blocks in UP and exim-products of IOCL have been the signature events in the recent past. d)The trading business, which comprises of import and import financing through BG backed model, contributed to 35% of the total operational income. MSTC also supplied imported coal worth 272 Crore to power generating companies. e) MSTC has taken many steps with a view to benefit the farmers of entire North East Region. MSTC and other stakeholders including NABARD, NERAMAC, CRWC, FPOs, etc. are working together for the overall development of the Agri-horti EcoSystem in the North East Region. The MSTC plans to enter into umbrella agreement with the State Government of the North East States for providing complete e-commerce solutions with a focus on Agri-Horti products.

Financials of MSTC Limited IPO:

 
Year Revenue(Cr) Expense(Cr) PAT(Cr) FV Debt Equity(Cr) NW(Cr) Debt/NW EPS
2017 1876.2 1692.8 133 10 688 352 406 1.69 18.89
2018 2793.1 2758.3 -9.7 10 766 352 366 2.09 -1.38
6MFY18 1491.5 1450.0 -12.1 10 298 704 327 0.91 -1.72
IZ Review 1. The Company has shown excellent growth in terms of Revenue in the last 3 years. 2. The company went into a loss in the FY17-18 due to bad debt written off. 3. The company's debt/equity is under 1. 4. The Mcap of the Company is 851 Cr and EV of 1100 Cr. 5. The Company has an EBITDA of 114 Cr in FY18. 6. The Valuation in terms of EV/EBITDA at 9.69 looks reasonable. The Retail discount of 5.50 will act as a cherry.

Comparison With Peers:

There is no peer in the listed space.

Recommendation on MSTC Limited IPO:

Review and Recommendation of MSTC Limited IPO from IZ team is: 4/10. [ The Company has come up with a Reasonable Valuation in terms of P/B of 2.78 and EV/EBITDA of under 10. The loss of FY18 is due to bad debt written off by the company to clean its balance sheet. ]

Lead Manager of MSTC Limited IPO:

  1. Equirus Capital Private Limited

Registrar of MSTC Limited IPO:

  1. Alankit Assignments Limited
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