Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- MSTC Ltd (BOM:542597, Financial) reported a steady increase in overall revenue and PBT on a consolidated basis.
- The company saw a 15% year-on-year increase in business volume, excluding e-procurement.
- The shift to the new tax regime has reduced the total tax impact, keeping PAT almost at similar levels year-on-year.
- MSTC Ltd (BOM:542597) successfully developed and launched the Steel Import Management System version 2.0 in just two months.
- The company has developed a new portal for timber auctions in Chhattisgarh, which is expected to significantly impact the digital transformation of forest produce auctions.
Negative Points
- Total operating revenue on a stand-alone basis dropped by about 15% year-on-year, mainly due to a decline in the e-commerce segment.
- Income from marketing and other income remained flat, contributing to lower PBT.
- The departure of Coal India Limited as a major client has significantly impacted MSTC Ltd (BOM:542597)'s revenue stream.
- EBITDA decreased from INR72.27 crore to INR56.87 crore, and PBT from INR70.56 crore to INR54.48 crore.
- Profit after tax (PAT) decreased from INR44.57 crore to INR41.46 crore, and EPS dropped from INR6.33 to INR5.75.
Q & A Highlights
Q: What are MSTC's plans for the new segments like data centers and recycling, and what are the expected revenue inflows and CapEx requirements?
A: (Manobendra Ghoshal, Chairman and Managing Director) The data center is a logical extension as MSTC already has its own data center. The CapEx for this will not be significantly higher than the current levels. For recycling, MSTC is already involved through joint ventures, and this provision allows for quick action if opportunities arise.
Q: What is your vision for MSTC over the next 3-5 years?
A: (Manobendra Ghoshal, Chairman and Managing Director) The focus will be on leveraging digital platforms to transform physical processes. The aim is to achieve substantial growth in turnover and revenue streams by integrating multiple services and developing new portals.
Q: Can you provide more detailed sector-wise revenue data in your presentations?
A: (Subrata Sarkar, Chief Financial Officer) We appreciate the suggestion and will explore ways to provide more detailed information within the regulatory framework in future presentations.
Q: What impact has the loss of Coal India as a client had on MSTC's revenue, and how do you plan to compensate for this loss?
A: (Subrata Sarkar, Chief Financial Officer) The loss of Coal India has significantly impacted our revenue. We are striving to onboard new clients and expect to see positive results from Q3 onwards.
Q: What are the current competitors in the e-commerce segment, and how does MSTC plan to stay competitive?
A: (Manobendra Ghoshal, Chairman and Managing Director) There are 2-3 major competitors in the private sector. MSTC differentiates itself by offering a comprehensive array of services beyond just auction platforms, which we believe gives us a competitive edge.
Q: What is the status of the FSNL selloff, and how will it impact MSTC's earnings?
A: (Manobendra Ghoshal, Chairman and Managing Director) The FSNL selloff is being handled by DIPAM, and it would not be appropriate to speculate on its impact on MSTC's earnings at this stage.
Q: Can you provide a breakdown of the e-commerce revenue for the last year?
A: (Subrata Sarkar, Chief Financial Officer) Approximately 50% of the e-commerce revenue comes from scrap sales. The exact figures for Coal India's contribution are not segmented, but the drop in revenue this quarter is mainly due to the loss of Coal India as a client.
Q: What is the outlook for scrap prices, and how have they behaved over the last year?
A: (Manobendra Ghoshal, Chairman and Managing Director) Scrap prices have fluctuated within a range of plus-minus 10% over the last three years. The demand for scrap is expected to remain high due to its necessity in various industries, particularly the ferrous industry.
Q: What are the plans for utilizing the cash reserves, and what is the current net debt?
A: (Subrata Sarkar, Chief Financial Officer) We will provide a clearer picture of cash reserves and net debt in the Q2 call. The utilization of funds will be aligned with opportunities that offer substantial returns.
Q: How does MSTC plan to grow its e-commerce vertical given the increased competition?
A: (Manobendra Ghoshal, Chairman and Managing Director) We are focusing on organic growth by finding more clients and integrating services. We are also exploring upstream and downstream activities to add value to our offerings.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
