Government-owned trading and service companies MMTC and MSTC stole the limelight in today’s stock market, January 8, 2025, surging significantly in an otherwise subdued trading session. MMTC shares climbed as much as 13.8% to ₹80.70 on the BSE during intraday trading, while MSTC shares rallied 9.8%, touching ₹725. By 1:40 PM, however, both stocks pared some gains, with MMTC trading 7.6% higher at ₹76.31 and MSTC up by 4.5% at ₹691.65.
In stark contrast, the Sensex traded lower by 0.5% at the time, reflecting broader market weakness. Despite the downtrend in benchmark indices, MMTC and MSTC shares outperformed sharply, fuelled by renewed investor interest following a report about potential government initiatives under the Vehicle Scrappage Policy.
Government push for vehicle scrappage policy
According to a report aired by ET Now, the government is likely to introduce new proposals to bolster the Vehicle Scrappage Policy. These include making the re-registration process for vehicles older than 10–15 years costlier and encouraging automobile manufacturers to utilise recycled raw materials from scrapped vehicles for new production.
Additionally, vehicle owners scrapping old vehicles might benefit from ‘Tradeable Certificates,’ enabling them to avail of tax benefits. These developments are expected to expand scrappage centres across India, generating demand for recycling and raw material supply.
Although Business Standard could not independently verify the report, the market sentiment towards MMTC and MSTC surged, given their strategic roles in metals and materials recycling.
MSTC: Pioneers in recycling and auctions
MSTC, a ‘Mini Ratna’ Central Public Sector Enterprise (CPSE) under the Ministry of Steel, was originally established to export ferrous scrap. Over the years, it has diversified into conducting auctions and tenders for industrial scrap and surplus materials on behalf of government clients.
In a joint venture with Mahindra Accelo Limited, MSTC ventured into recycling and established India’s first Registered Vehicle Scrapping Facility. This strategic alignment with the Vehicle Scrappage Policy places MSTC in an advantageous position, poised to benefit from upcoming regulatory changes and increased demand for recycling services.
At the close of the September quarter, the Government of India held a 65.75% stake in MSTC. Public shareholders include mutual funds (0.5%), insurance companies (1.1%), and foreign portfolio investors (FPIs), who own 5.9% of the company.
MMTC: Diverse trading expertise
MMTC, another government-owned entity, is renowned for its diverse trading portfolio, encompassing minerals, metals, gems, jewellery, fertilisers, agro products, coal, and hydrocarbons. It also deals in engineering goods, chemicals, electronics, bullion, and steel products.
MMTC’s vast experience in trading and raw material supply positions it as a key beneficiary of any policy encouraging the use of recycled materials. The company’s capabilities align with the broader objectives of the Vehicle Scrappage Policy, particularly in sourcing and distributing metals for industrial use.
As of the December quarter, the Government of India held an 89.9% stake in MMTC. Public shareholding includes foreign institutional investors (FIIs) with 0.11% ownership and Life Insurance Corporation of India (LIC) with 1.66% ownership.
Trading activity highlights
Today, trading volumes for MMTC surged significantly, with a combined 42.94 million shares changing hands across the BSE and NSE. MSTC also saw heightened activity, with 0.96 million shares traded.
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The increased trading activity reflects strong investor confidence in the potential of these companies to capitalise on upcoming government policies. The proposed expansion of vehicle scrappage centres and increased demand for recycled raw materials could serve as significant growth drivers for both MMTC and MSTC.
Future prospects and analyst views
The government’s push for sustainable practices through the Vehicle Scrappage Policy aligns with global trends favouring recycling and circular economy principles. For companies like MSTC and MMTC, this creates a robust growth trajectory, given their established expertise in recycling, trading, and material sourcing.
While the broader market remains under pressure, the surge in MMTC and MSTC shares underscores the potential for niche sectors to outperform amidst policy-driven tailwinds. Investors will likely continue to monitor developments in the scrappage policy, given its implications for the industrial and metals sectors.
With renewed focus on sustainability and infrastructure, both companies appear well-positioned to ride the wave of transformation in India’s recycling and materials management landscape.
