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MSTC Ltd

| Q2 FY26 Earnings Conference Call

NEUTRAL SENTIMENT

Report Source

⬤13th Nov 25

Summary : MSTC sustained Q2 FY26 revenue growth driven by e-commerce, expanding into new government digital platforms and long-term contracts, despite some market headwinds and initial costs for new ventures.

Management Perspective positive : Building upon a good start of Q1 of FY26, we have sustained a good revenue trend. We have made some appreciable progress. This is going to be quite a game changer. We do feel that the growth can be a little more supplemented with the new ventures.

Concall Report Analysis & Insights

Business Overview

  1. MSTC sustained good revenue growth in Q2 FY26, both year-on-year and sequentially.
  2. Revenue growth is primarily driven by the flagship e-commerce segment.
  3. The company is consolidating its business areas into e-commerce and software application development.
  4. Key new projects include platforms for EPR certificates, gold bullion import, and various state government auctions.
  5. H1 FY26 saw 301.67 billion in value of goods transacted, with PBT and PAT increasing.

Future Growth Prospects

  1. Developing an electronic trading platform for EPR certificates, expected to be a significant game changer.
  2. Establishing an online platform for gold bullion import allocation, with potential for other commodities.
  3. Expanding e-commerce services through long-term agreements, like the 30-year MoU with Syama Prasad Mookerjee Port.
  4. Launching new digital platforms such as Upkaran for equipment leasing and a travel portal for government and private sectors.
  5. Monetizing additional data center capacity after strengthening internal infrastructure.

Management Insights

  1. Management is pleased with sustained revenue and profit growth in Q2 FY26.
  2. The company is actively pursuing new government contracts and expanding its digital platform offerings.
  3. Focus is on developing robust e-commerce and software solutions for various sectors.
  4. Long-term agreements are a strategic priority to ensure sustainable business growth.
  5. New ventures leverage existing infrastructure and expertise to minimize additional costs.

Signs of Skepticism

  1. Management declined to provide specific numbers for future top-line growth improvements.
  2. Revenue projections for new ventures like EPR trading and the travel portal are vague, with significant revenue expected only in future fiscals.
  3. The vehicle scrapping business is acknowledged as a 'slightly slow process' with challenges in data availability and incentives.
  4. The joint venture MMRPL is performing as expected but has not yet become profitable.
  5. Management noted difficulty in providing detailed revenue breakups due to the 'bits and pieces' nature of earnings and dependence on external events.

Risk Factors

  1. Softening scrap prices have continued over several quarters, impacting a significant revenue segment.
  2. The vehicle scrapping business is progressing slowly due to lack of incentives and unorganized market players.
  3. The joint venture MMRPL with Mahindra Auto is not yet profitable, despite sequential improvements.
  4. New platforms like EPR trading and the travel portal have initial development costs and uncertain immediate revenue contributions.
  5. Revenue is highly dependent on government disposals and external events, making trends difficult to predict.

Good To Know

  1. H1 FY26 standalone PBT was 125.79 crores and PAT was 93.47 crores.
  2. H1 FY26 consolidated PBT was 122.16 crores and PAT was 89.84 crores.
  3. E-commerce income grew by 18.47% in H1 FY26.
  4. The company's dividend policy mandates a minimum of 30% of PAT or 4% of net worth, whichever is higher.
  5. MSTC is developing a software application backbone for Kendriya Police Kalyan Bhandar (KPKB).

Key Drivers

  1. EPR certificate trading platform launch.
  2. Gold bullion import platform operational.
  3. New long-term government contracts.
  4. Expansion into B2C travel portal.

Key Analyst Discussions

Competitive Environment

  1. Balmer Lawrie is considered a prime competitor for the government travel portal.
  2. MSTC aims to compete with established players in the government travel sector.

Market Trends & Consumer Behavior

  1. Softening of scrap prices has continued over several quarters.
  2. EPR regulations are expected to drive increased volumes for the new trading platform.
  3. Vehicle scrapping requires good incentive schemes to accelerate.

Financial Highlights

  1. H1 FY26 revenue grew 9.31% to 195.96 crore, with e-commerce up 18.47%.
  2. EBITDA increased 10.24% to 130.71 crore in H1 FY26.
  3. Standalone PBT grew 12.81% and PAT grew 11.96% in H1 FY26.
  4. Consolidated joint venture loss was 3.63 crore in H1 FY26.
  5. CAPEX is not expected to be capital intensive, focusing on server maintenance and new ventures.

Product Composition

  1. E-commerce revenue is a mix of percentage-based (scrap) and event-based (coal, e-sale) models.
  2. Scrap business contributes almost 50% of current revenue.
  3. New portals like eUpkaran and the travel portal are in early stages of business model development.

Strategic Considerations

  1. Analysts inquired about the revenue potential and take rates for the vehicle scrapping business.
  2. Questions were raised regarding the opportunity and revenue from the EPR trading platform.
  3. Queries focused on the revenue model and competition for the new government travel portal.
  4. Discussions included the progress of the Telangana e-procurement mandate and eUpkaran portal.
  5. Management was asked about the monetization plans for its data center business.
MSTC Ltd (MSTCLTD) Concall Report Analysis & Insights | Dhanarthi