This PSU stock has zoomed over 100% in last six weeks

MSTC hit a new high of Rs 995.45 and rallied 30% in past three trading days

Shares of MSTC surged 9 per cent on BSE to hit a record high of Rs 995.45 in Wednesday’s intra-day trade on heavy volumes in an otherwise weak market.

The stock of the public sector undertaking (PSU) company was trading higher for the third straight day, zooming 30 per cent during the period.

In the past six weeks, the market price of MSTC has more than doubled or skyrocketed 131 per cent from a level of Rs 431.3 on December 6, 2023.

At 11:16 AM; MSTC was quoting 7 per cent higher at Rs 983 as compared to a 1.5 per cent decline in the S&P BSE Sensex. A combined 2.4 million equity shares changed hands on the NSE and BSE.

MSTC is under the steel ministry and is engaged in trading of various items and e-commerce services viz e-auctions and e-procurement services.

MSTC earns stable service income through the e-commerce business. The direct trading sales and service income from trading through facilitator mode (majorly purchase of raw material for secondary steel producers and petrochemical industry) has been gradually reducing with shift in focus towards the e-commerce business.

The recent initiative of the government for the sale of mineral blocks, both major and minor, through e-auction has also opened window of opportunity for MSTC and it has signed agreements with most of the state governments, which may yield positive results to the revenue of MSTC, as per analysts. 

During the first half (April to September) of the financial year 2023-24 (H1FY24) MSTC crossed Rs 62,603 crore in terms of value of goods transacted through its e-commerce and marketing verticals.

MSTC successfully completed sale of 3.1 million MT of Barytes for Rs 1,007 crore on behalf of Andhra Pradesh Mineral Development Corp in July 2023.

In Madhya Pradesh, 36 Sand Groups have been successfully auctioned realising Rs 1,060 crore for the state.

Analysts believe the company’s outlook will remain 'stable' over the medium term on account of the company’s established track record, controlling stake of the govt, increased focus towards ecommerce business from trading operations and strong financial risk profile.

The stable outlook reflects that MSTC is expected to continue deriving advantage from its established position in the e-commerce business, especially for its government clientele which along with the favourable demand scenario should enable it to sustain healthy business risk profile over the medium term supported by a comfortable financial risk profile, as per CRISIL Ratings.