MSTCLTD - MSTC Limited Share Price

The management of MSTC Limited expressed optimism about the company's future performance during the Q4 FY '25 earnings call. They noted a significant turning point with the resumption of the coal auction business for Coal India, emphasizing their potential for steady revenue growth moving forward. The management aims for an ambitious year-on-year growth of about 10-12%, driven by business diversification and new service offerings.

Key forward-looking points highlighted include:

1. Coal Auctions: With coal mining operations expected to expand, MSTC anticipates an increase in the volume of coal sold through e-auctions, given that they secured approval for conducting auctions over the next 2-odd years.

2. New Initiatives: The launch of MSTC's realty portal aims to enhance their offerings in the real estate sector. Management mentioned a focus on reaching out to cooperative banks for NPA disposal and auction services.

3. Diversification into New Areas: MSTC is looking to leverage its software development expertise by creating customized portals and dashboards for various clients, including an e-auction system for 730 FM channels and a platform for the Ministry of Civil Aviation's UDAN scheme.

4. Financial Performance: For FY '24-25, profit before tax (PBT) was reported at INR 503.90 crores, a significant increase from INR 284.44 crores the previous year. Profit after tax (PAT) rose to INR 402.98 crores compared to INR 171.92 crores in FY '23-24.

5. Investment in Technology: MSTC plans to develop new solutions like equipment leasing portals and ERP systems for mining operations, enhancing their service offerings to existing clients and attracting new ones.

Overall, MSTC Limited's management is optimistic about future revenue growth, driven by strategic initiatives, technological advancements, and increased operational capabilities.

Here are the major questions along with their detailed responses from the Q&A section of the MSTC Limited Q4 FY '25 earnings transcript:

1. Kamlesh Bagmar: "How do we see the revenue growth panning out in the next couple of years for Coal India e-auctions?"

   Bhanu Kumar: "Revenue from Coal India e-auctions is event-based, and as their mining operations expand, auction volumes are expected to increase. Therefore, we anticipate an upward revenue trajectory aligned with these developments."

2. Kamlesh Bagmar: "What revenue growth are we forecasting over the next 2-3 years overall?"

   Bhanu Kumar: "We've seen flat revenue growth recently but are optimistic. Historically, we targeted yearly growth of about 10-12% and aim to return to that level as we develop new initiatives."

3. Vinay Nadkarni: "What is the INR 10.06 crore impairment loss?"

   Subrata Sarkar: "This loss relates to our investment in MMRPL. As it incurred losses, we had to conduct a fair valuation, leading to this accounting adjustment. We are hopeful for recovery in the future."

4. Vinay Nadkarni: "What would be a steady state tax rate for MSTC?"

   Subrata Sarkar: "Going forward, we expect a steady tax rate around 25%, as we have opted for the lower tax regime. This will be consistent given the current taxation laws."

5. Ronak Raichura: "What efforts have we made to secure contracts with private companies?"

   Bhanu Kumar: "We have established relationships with major private entities like Indus Towers, Reliance Industries, and Tata Group. Our service model encourages new project explorations once they experience our offerings."

6. Anant: "Can you provide a split between revenue from the private sector and the government?"

   Bhanu Kumar: "While we don't have detailed segmentation, approximately 90% of our revenue derives from the private sector, with around 10% from government contracts."

7. Rakesh: "What is the revenue impact of the recent contract with the Government of Telangana?"

   Bhanu Kumar: "The potential is considerable, but quantifying it now is challenging as we are just beginning to onboard services following the agreement."

8. Vinay Nadkarni: "Can we estimate the income coming from Coal India auctions in FY '26?"

   Bhanu Kumar: "We expect variability based on many events, but revenue could align with approx. 10% of our total e-commerce revenue if calculations hold from past performance."