Buy Wall Street Finance: Chugh

Chugh told CNBC-TV18, "Wall Street Finance is a twenty-year old company, which is involved in money changing and money transfer business. The Patel family of Bombay was holding close to about 66% stake in this company. In the month of July 2008, they transferred half of that stake to Reliance Money Express by sell of one of their group companies to Reliance Money Express. By virtue of that transaction, Reliance Money has become one of the co-promoters of this company and also has got access to 33% stake in the company. Subsequently, Wall Street Construction has been merged with Reliance Money Express and that company now seizes to exist."

He further added, "Pursuant to the stake sell there are a few developments which have happened in this company, Mr. Sudip Bandyopadhyay of Reliance Money, Mr. SP Talwar who is the ex-Deputy Governor of RBI and Mr. Rajnikant Patel, ex-Managing Director of Bombay Stock Exchange have joined the board of Wall Street Finance. This company has recently applied to RBI for their permission to get into the domestic money remittance business. Domestic money remittance business is a business, which is currently being done only by the post office by a facility called money order. So this could be a very big market for this company."

"The promoters of the company over the past few months have been acquiring shares through creeping acquisition. They have increased their stake by 3% in the October to December quarter and in January and February also you can see Reliance Money buying on a regular basis as per the various disclosures which they have made to the stock exchange. Company has also been talking about overseas acquisitions and they have convened the EGM for authorizing the board to raise about 60 crore through redeemable preference shares probably those funds will be used for funding the overseas acquisitions."

"If you look at the business, I think this business has got significant entry barriers. This company has got 82 license, which allows it to be a money changer and also permits it to transfer money. Only a handful of companies in India have the 82 license, Wall Street Finance being one of them. I am told that 82 license is difficult to get these days and that is probably the reason that Reliance has acquired this company. So there is an entry barrier in the business and also the possibility of Anil Dhirubhai Ambani Group acquiring a 51% stake in this company is pretty much there. It could happen at a later date either though a preference issue or through some other means. So all in all you have a Anil Ambani Group company available at a market cap of just about 50 crore."

"We don’t have complete information on the future plans of the company, the company has not done any investor conference, there are no institutional investors in the company, and the volumes in the stock are very low. I think all these make stock a potential multibagger; these are basically the ingredients which can make this stock a potential outperformer in the future. This stock is probably one of the few Anil Ambani Group companies, which provides the opportunity for the investors to buy the stock at the same price at which Anil Ambani Group acquired the stock in the company. So at this price I think this stock is one which can be slowly accumulated by the investors and held on for at least 3-4 years. I believe that you can gain multifold in this stock."

"Given the current state of the market I don’t rule out the possibility of the investors seeing a mark-to-market (MTM) loss also in the interim but that should not deter the investors from offloading or selling that stock. So this is for those who can be patient, can buy and hold for a couple of years."