MSTC said that Acuite has reaffirmed the long-term rating of 'ACUITE A+' and reaffirmed the short-term rating of 'ACUITE A1+' on the bank facilities of the company with 'stable' outlook.
Acuitsaid that the rating takes into account improving EBITDA margin, abielt fluctuating sacle of operations and healthy financial risk profile of MSTCL. The company's revenue stood at Rs.722 Cr. in FY2023 as against Rs. 877.61 Cr in FY2022.
The operating margins improved to 27.24 percent in FY2023 as against 1.27 percent in FY2022. The reason behind this robust improvement is favourable revenue mix with a higher share of the e-commerce business and scrap business, as well as a scaled-down trading business and better margin in service charges. The increasing share of the e-commerce business (40.31%) and scrap business (54.88%) in the revenue mix improved the EBITDA margin in FY2023.
The financial risk profile of the company continues to be healthy with healthy debt protection metrics and low gearing. The overall gearing of the company stood at 0.18 times as on 31 March 2023 as against 0.23 times as on 31 March 2022. The interest coverage ratio stood at 2256.92 times in FY2023 as against 90.71 times in FY2022.
Further, the rating continues to derive strength from the company's long track record and established position of the company in e-commerce segment, Government of Indias (GoI) controlling stake and robust financial risk profile led by accelerated deleveraging.
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The ratings also factor in the improvement in the profit levels due to shift of focus to ecommerce segment from the trading segment. The liquidity position of the company remains strong, which is reflected in robust accruals.
These strengths are partially offset by elongated working capital management of the company.
MSTCs (formerly known as Metal and Scrap Trading Corporation) core activity of the company is diversified mainly into providing e-auction/e-procurement services and trading of bulk products like ferrous and non-ferrous scrap, coke, finished steel, coal and petroleum products.
The scrip added 0.89% to end at Rs 917 on the BSE on Thursday.
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