Avoid Money Matters Financial Services: Maximus Securities

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Avoid Money Matters Financial Services: Maximus Securities

Maximus Securities is bearish on Money Matters Financial Services and has recommended avoid rating on the stock in its December 8, 2010 research report.

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Maximus Securities is bearish on Money Matters Financial Services and has recommended avoid rating on the stock in its December 8, 2010 research report.

"Money Matters Financial Services Ltd (MMFSL) is a non deposit taking NBFC primarily focused in the business of financial advisory services (debt syndication) and trading in debt securities. The company is engaged in businesses such as credit syndication, securities brokerage, lending and proprietary bond trading besides equity market advisory services. They are also the holding company for Merchant Banking & Broking Businesses housed in their subsidiaries."

"Started in a small room a few years ago with two or three employees, the rise of Money Matters Financial Services, founded by Rajesh Sharma, was like a fairy tale until recently when Mr. Sharma, CMD and Mr. Gattani, CFO of the Company was arrested by CBI in one of the biggest corporate loan scams. The stock of the Company has fallen by 67% from its 52-week high of Rs 703.55 reached on 16th November 2010 on the news of key personnel of the Company being arrested by CBI for allegedly bribing bank officials to get loans sanctioned for some developers. The Stock is hitting the lower circuit since the news broke on 24th November 2010."

"At the current market price of Rs 228.95 the scrip trades at P/BV ratio of 2.26x. The 52-week high and low P/BV averages to 5.13x. Though the current valuation appears to be cheap one should avoid taking position in the stock as its future business growth is skeptical. The current scenario is likely to see a lot of litigation with a distinct possibility of liquidator being appointed. The valuation of the Company comes from the value of Fixed Deposits it holds," says Maximus Securities research report.

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To read the full report click on the attachment