MSTC hits new high on the back of heavy volumes; zooms 92% thus far in 2021

The stock hit a record high of Rs 314.65, up 19% on the BSE, in the intra-day trade today

Shares of MSTC continued at their northward movement, surging 19 per cent and hitting a new high of Rs 314.65, on the BSE on Friday on the back of heavy volumes. MSTC, a government-owned company, is engaged in domestic and international trading activity for over 30 years.

Thus far in the calendar year 2021, the stock has zoomed 92 per cent, as compared to a 6 per cent rise in the S&P BSE Sensex. At 02:55 pm, it was trading 13 per cent higher at Rs 300, as against a 0.35 per cent gain in the benchmark index. Trading volumes on the counter more-than-doubled with a combined 3.3 million equity shares, representing 4.7 per cent of total equity of MSTC, having changed hands on the NSE and BSE till the time of writing of this report.

On January 5, MSTC announced that it has signed a Memorandum of Understanding (MOU) with Department of Mines and Geology, government of Andhra Pradesh for selection of agency to carry out sand operations in the state of Andhra Pradesh on January 4, 2021.

Besides, in a separate regulatory filing, MSTC said on January 15 that it has signed an agreement with Uttar Pradesh Financial Corporation (UPFC). As per the deal, MSTC has been engaged by UPFC as selling agents for selling of assets owned by UPFC as well as the stressed assets of its finance assisted units which have now become defaulting industrial concerns through E-tender-cum-E-Auction on MSTC’s website.

MSTC further said, "The agreement shall remain valid till either party terminates it by giving advance written notice of 3(three) months to the other party for reasons to be furnished."

Financially, MSTC’s total debt decreased significantly from Rs 2,753.76 crore as on March 31, 2018 to Rs 704.58 crore as on March 31, 2019 and further to Rs 280.04 crore as on March 31, 2020 on account of lower working capital utilisation and significant decrease in acceptances. "The total debt further decreased and stood at Rs 158.33 crore as on September 30, 2020, a major part of which is the subjudice liability of Standard Chartered Bank (SCB). The consistent decrease in working capital is on account of reduction in trading business," CARE Ratings said in rating rational.

Recently, the agency reaffirmed the credit rating to various bank facilities availed by the MSTC. "The ratings assigned to the bank facilities of MSTC continue to draw strength from the long track record and established position of the company in e-commerce segment, Government of India’s (GoI) controlling stake and stable source of revenue from service income," it said.

A board meeting of the MSTC is scheduled to be held on Thursday, February 11, 2021, to consider and approve the financial results of the Company for the quarter ended December 2020 (Q3FY21).