MSTC Closes 5% Lower In Stock Market Debut
MSTC’s shares has a mixed stock market debut today.
State-run MSTC started trading at Rs 111 per share over its issues price of Rs 120 on the BSE Ltd. The stock recovered some lost ground to hit the daily trading upper limit at Rs 116.5 apiece before closing 4.83 percent lower at Rs 114.20 apiece.
The e-commerce company's IPO was subscribed 1.12 times on the last day of bidding. The Rs 226-crore IPO received bids for 1,98,69,390 shares against the total issue size of 1,76,70,400 shares. After the IPO, the government holds a 65 percent compared to a previous 90 percent.
What The Company Does
MSTC started as a trading company for importing ferrous scrap and emerged as an e-commerce service provider and trader for bulk raw material. Though the company generates more than 80 percent of its revenue from trading, the contribution of the e-commerce segment to its bottom line has been rising.
MSTC provides e-auction/e-sale and e-procurement services and develops customised software or solutions. So far, it has conducted 1.9 lakh auctions for 1.1 lakh users as of December 2018. The company is also engaged in importing and local sourcing of bulk industrial raw material for traders.
It has three business models—cash and carry model, 110 percent bank guarantee and associate supplier model—in the trading business. Earlier, the company used to operate under the cash and carry model because of which it suffered losses. It now shifted completely to the bank guarantee model.
MSTC has also formed a joint venture with Mahindra & Mahindra Ltd.’s wholly owned subsidiary to foray into the recycling sector. It set up a collection-cum-dismantling centre in Uttar Pradesh for processing scrap from old vehicles and other white goods. The joint venture is also in the process of setting up a shredding plant.