MSTC shares up 62% in 4 months; experts see further upside on PSU stock

Small-cap public sector undertaking (PSU) MSTC Ltd has been buzzing on Dalal Street due to a sharp rally in the domestic equity market. Shares of the company have surged 62.37 per cent to Rs 410.65 on July 24 from Rs 252.90 on March 31, 2023. A look at the annual report of FY22 shows that the company is also set to benefit from the vehicle scrapping policy.

MSTC Ltd was listed on the bourses in March 2019, and its shares have advanced 242 per cent so far against the issue price of Rs 120 apiece. For the financial year ended March 2023, the company posted nearly 22 per cent growth in consolidated net profit at Rs 241.96 crore. On the other hand, consolidated gross sales of MSTC declined around 18 per cent YoY to Rs 720.97 crore. The consolidated operating profit of the company jumped 38 per cent YoY to Rs 353.76 crore in FY23.

Fundamental and technical analysts on Dalal Street are bullish on MSTC despite the recent rally. Nirav Chheda, Senior Technical Analyst, Nirmal Bang Securities, said, “MSTC is making a rounding formation on the long-term chart with a major breakout above the Rs 380 levels. The stock is likely to move towards Rs 500 in the near term while it may touch Rs 700 in the long term.”

Kranthi Bathini, Equity Strategist, WealthMills Securities added that the company’s operating performance has been improving. Investors should continue to hold the stock.

MSTC is engaged in the business of e-commerce, trading and recycling. The PSU provides e-commerce-related services across diversified industry segments offering e-auction/e-sale, e-procurement services and the development of customised software or solutions. It has also set up India’s first authorised collection and dismantling centre at Greater Noida, for the scientific recycling of end-of-life vehicles (ELV) and white goods through its joint venture, Mahindra MSTC Recycling Private Limited (MMRPL) with Mahindra Intertrade Ltd, wherein the ELVs are purchased for de-polluting, dismantling and converting the metallic parts into bales in an environmentally friendly manner. The government held 64.75 per cent stake in the company as of June 30.

Sharing his views on MSTC, Milan Vaishnav, CMT, MSTA, Gemstone Equity Research and Advisory Services said, “The primary uptrend in MSTC remains intact. The stock has staged a strong rally after forming a base near Rs 250. The further thrust came when the stock staged a breakout from a symmetrical triangle when it crossed above Rs 346 levels in June this year.

“The ongoing trend will remain intact as long as MSTC manages to stay above Rs 385. If this level is violated, the stock may slip under some ranged correction,” Vaishnav said adding investors who are holding this stock can stay invested with a stop loss of Rs 385.

Also read: Hot stocks on July 25, 2023: SJVN, Aarti Drugs, Mazagon Dock, Can Fin Homes, and more

Also read: Stocks that share market analysts recommended on July 25, 2023: ICICI Bank, Paytm, NTPC, Sun TV Network

Also read: L&T, TVS Motor Co, IDBI Bank, Tata Motors, Bajaj Auto, Asian Paints, others among stocks to watch on July 25, 2023