Portfolio

52-WEEK FLOP: Money Matters Financial Services

| Updated on: Feb 12, 2011

Scam-hit Money Matters Financial Services (Money Matters), a non-banking finance company lost 51 per cent in a year placing it amongst the top under-performers in the market. However, the one-year return doesn't quite capture the roller coaster ride the stock actually had over the last one year.

After rising by as much as 257 per cent till the day before the alleged bribe-for-loan scam made the headlines in November 2010, the stock rapidly lost a hefty 85 per cent of its value to this date.

Money Matters was the key accused in bribing public sector bank employees for loan sanctions.

Money Matters shifted from a traditional lending setup to a debt syndication model over the last few years, and began to arrange loans for clients.

The debt syndication done over the two years ending FY-10 skyrocketed to Rs 44,750 crore, catapulting Money Matters into the big league in terms of debt syndication/ arrangers.

During this period, the company's operating income ballooned from Rs 7.1 crore to Rs 227 crore. For the quarter ended September 2010, the company's profits surged 64 per cent on the backs of a 66 growth in operating income.

Additionally, the company had raised Rs 455 crore to support future loan growth. It once again received a thumbs-up from the stock market. However, with CBI unearthing the scam, the stock lost more than four-fifths of its value.

Currently it is trading at less than half its September 2010 book value (post fund raising by way of QIP).

Published on February 12, 2011

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