Shares of two public sector undertakings (PSUs) - Metals and Minerals Trading Corporation of India (MMTC) and State Trading Corporation (STC) continued their losing streak for the third straight session amid reports that the government might shut down these companies. Shares of MMTC have fallen as much as 27% in the last three sessions, while STC stocks lost 24% in market value during the same period.
On Friday, MMTC shares opened lower at ₹63.50 on the BSE, hitting its 10% lower circuit limit for the third consecutive session. Despite the recent fall, the smallcap stock had a strong run at stock exchanges this year after hitting its 52-week low of ₹26.36 on April 28, 2023. Earlier this week, MMTC shares hit a 52-week high of ₹89.04 on October 17, rebounding nearly 240% from its 52-week low levels. The market capitalisation currently stands at ₹9,525 crore.
In a similar trend, STC shares declined as much as 6% to hit an intraday low of ₹127 on the BSE. The PSU stock was locked in a 10% lower circuit limit in the previous two sessions. With a m-cap of ₹769 crore, the microcap stock trades 28.5% lower than its 52-week high of ₹177.65 touched on October 17, 2023. It dipped to its 52-week low of ₹62.05 on February 27, 2023.
Union Commerce Minister Piyush Goyal is expected to take a final call on the closure of three state-run entities, MMTC, STC, and Project & Equipment Corporation (PEC) in a high-level meeting on October 23, as per media reports. As per the exchange data, the central government held 90% stake in MMTC and 89.93% shares in STC as of September 30, 2023. However, the shareholding details of PEC were not available publicly.
In September 2022, the commerce ministry denotified these three PSUs as canalising agencies for trade after it observed that there was no need for any canalising agency in the Department of Commerce.
MMTC was the canalising agency for export and import of high-grade iron ore, manganese ore, and several other precious metals, while PEC was the canalising agency for the export and import of machinery and railway equipments. STC used to be the canalising agency for imports of essential items of mass consumption like edible oils, sugar, pulses, and wheat.
In August 2023, the capital market regulator Securities and Exchange Board of India (SEBI) had cancelled MMTC's licence as a stockbroker amid its alleged involvement in illegal paired contracts in a case related to National Spot Exchange Ltd.
On the financial front, STC posted a net profit of ₹32.89 crore in FY23, against a net loss of ₹93.97 crore in FY22, aided by rental income and lower operating costs amid reduction in manpower. However, the revenue was zero for FY22 and FY23 amid suspended business activities since November 2020.
On the other hand, MMTC reported net profit at ₹1,072 crore for FY23, compared to a loss of ₹270 crore in the previous fiscal. The revenue dropped 70% year-on-year to ₹3,528 crore in FY23.
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