ipo: Day 2: MSTC IPO subscribed 11% so far

NEW DELHI: The initial public offer (IPO) by Miniratna MSTC received tepid response so far on Day 2.

The issue received bids for 19,21,500 shares by 4:30 pm, which was 11 per cent of the total issue size of 1,76,70,400.

At the upper price band of Rs 121-128 per share, the issue size stands at Rs 226 crore.

At the higher end, the company is demanding a price to sales valuation of 0.4 times to its FY18 sales. Based on FY19E and FY20E sales, the issue is calling for a P/S valuation of 0.3 times.

In terms of EV/sales, the stock is available at a 0.26-0.29 times FY18 numbers.

While brokerages are positive on the issue, some of them raised concerns about losses the company incurred in previous financial years and the company’s exposure to legal proceedings related to a dispute in connection with cancellation of export import licence.

“Considering the importance and positioning of its services among various government entities, favourable government policies for business growth, stable dividend payout and improvement in the financial performance, the issue seems to be attractively priced,” said Choice Broking.

MSTC will offer a discount of Rs 5.5 per share on the allotment price to retail investors.

“The financial performance of the company is not encouraging. Despite reporting increased transactions across the marketing and e-commerce segments, it reported a 16.2 per cent CAGR decline in top line over FY16-18, which was mainly due to sharp decline of sales of thermal coal. Reported Ebitda was in loss for the majority of the time period,” analysts said.

Revenues for the first half of FY19 came in at Rs 1,491.55 crore. For FY18, FY17 and FY16, sales stood at Rs 2,793.15 crore and Rs 1,876.2 crore and Rs 3307.80 crore, respectively. Revenue for the trading vertical read Rs 1,207.52 crore for the six months to September while e-commerce vertical sales came in at Rs 104.57 crore.

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