MSTC Ltd.: Growth through to E-Commerce

Latest Investor Presentation:

The Ken article says nothing new actually. It’s basically a summary of the standard thesis pointers, and the anti-thesis pointers mentioned are increased competition from GEM and potential government interference.
No new insights whatsoever.



MSTC has been selected for 5G auctions


They will charge Rs. 1 to the government for this. So nothing to be enthused about for investors.



MSTC_HSL_220422_EBR-1 oCXN8.pdf (6.4 MB)



I have been adding MSTC since the past one year now. As this thread has been dead for some time, I thought I would update it with my thesis and rationale to help other investors as well as move the discussion forward.

I will not add too much about the background of the company since it has all been already discussed. The video uploaded above in the thread gives a good background of the transformation the company is going through. I will simply share 3 reasons why I feel this is an attractive opportunity -

1. The write offs from the trading business are complete
MSTC was into a completely different business until a few years ago. It was into scrap trading and that business had terrible receivable days and bad debts. It took the company multiple years of write offs to wipe them out. But today, their focus is completely on the e-commerce unit and all other divisions are either been shut down or sold off.

Look at how beautifully the balance sheet has been cleaned up. From borrowings to trade receivable to trade payables, all of them have been significantly reduced to move towards an asset light e-commerce model

2. E-commerce revenues, profit and growth looks robust

2016 2017 2018 2019 2020 2021 2022
Marketing 2811 1326 2262 2748 646 406 413
E-commerce 127 161 190 213 202 221 294
Others 21 59 6 7 43 11 0
Scrap 346 328 339 378 409 364 415

Look at the revenues for the e-commerce division. It has been growing every year at a steady pace. The overall growth has been 15% cagr from 2016-22. This shows that the business is not cyclical or one off.

The revenues are also well diversified with less dependence on any single customer. Even though the GOI is the major customer, MSTC has contracts with most of the state governments, union territories and PSUs and not just the central government. They have also started to enter the private space and have contracts from Reliance, Vedanta, etc. The management has taken active efforts in reducing dependencies on scrap auctions and diversifying in other segments (coal auctions, telecom, NPA auctions, Property, etc)

If you read the news, you might have noticed every other day there is some news on new items being auctioned off on MSTC. The government wants to ensure a transparent way to auction and hence the growth is very real and very visible.

All of these are auctioned off on MSTC

3. The company is massively undervalued

Current Market cap – 1780 cr
Standalone cash on books – 780 cr
Subsidiary FSNL valuation – 400 cr (roughly)

The procedure for sale of FSNL has already been started and looks like it might be completed soon. As per last financial year, FSNL had revenues of 405 cr and PAT of 40 cr. It has cash on books worth 161 cr. It has no long-term debt. Looking at all of this, 400 crore seems like a conservative valuation.

So overall MSTC is available at a net value of 600 cr. All this for a company that has no long-term debt, has a steady e-commerce business growing every year and made 200 crores of net profit last year. The cherry on top is the 5% dividend yield the company is available at right now.

There is also the optionality of benefiting from the vehicle scrappage policy. MSTC has a 50-50 JV with Mahindra called Cero, focused on vehicle scrapping. Though real growth may be a few years away, Cero will have some early mover advantage.

The obvious and major risk here is that MSTC is a PSU company after all. Like most investors, I am no fan of GOI as an owner, but I also believe there is a price for every asset no matter what. After the sale, MSTC will be available at less than 3x EV/EBIDTA. For a diversified & growing asset light e-commerce company with optionalities and regular dividend payouts, this seems incredibly low.


Any view on competition from the governments GEM portal?

A technical analysis viewpoint on MSTC:

A nice ARC setup being formed from previous all time highs:

More B2B platforms gaining momentum


Government’s mandate for PSU/government departments is to move procurement to GEM portal. So you may have to ignore this part of MSTC business.

Disc: Exited couple of quarters back

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Does Anyone have a working link to the concall?
Please share if possible.


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Monthly Summary for the Cabinet for the month of March, 2023.

MSTC has successfully auctioned 11 Coal Mines in March, 2023. Besides,MSTC has launched 7th tranche of auction on 29 March, 2023 in which 106 mineswere put for auction. 19 Major Mineral Blocks of Maharashtra were put up for eauction. MSTC has successfully conducted the auction of 3 Nos. of
ATR aircrafts on behalf of AAI. In e-Auction portal the user interface of MSTC’s users have been upgraded with user friendly features. Similarly, the user interface for the sellers & the buyers are also under process for upgradation. MSTC has developed the eauction platform for auction of End of Life Vehicles (ELVs) and successfully sold 2,084 Central/State Government ELVs. At present 5,879 ELVs of Central & various State Govt. Departments/PSUs are under different stages of auction.
Recently, provisions in the ELV auction portal have also been created for the individuals to post their ELVs for sale through the portal.
MSTC Monthly summary Mar 2023.pdf (1.3 MB)


ELV Vehicles has been growing at tremendous rate which should benefit to MSTC Portal.


Concall snippets

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