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Sunday, December 14, 2008

Wall Street Finance-A New Jockey Atop A Dead Horse

Scripscan:Wall Street Finance
BSE:511147
CMP:Rs 66

Story:In a carefully carried out plant, the guys behind the Wall Street Finance stock placed a release in a pink daily which confirmed its acquisition by an ADAG concern. Financial terms were not disclosed, neither was it disclosed whether the Patel family (current owners) have moved out already ceding management control to ADAG or this has to be done. More importantly, it was not disclosed whether the take-over consideration will be paid through Stock or Cash and if at all there would be an open offer to acquire the Wall Street Finance shares from the public or swap them with the shares of the unlisted Reliance Money Express stock.Looking at the pitiable financials of Wall Street Finance, one wonders who has been the Greater Fool in this acquisition. Is it Reliance Money Express and hence Anil Ambani by default or the Patels who were either disinterested or never ever knew how to run the Financial Services, FXConversion and Money Transfer business. Considering that Q1 Revenues for Wall Street Finance were a mere Rs 8 crore, with after tax profits of Rs 40 lakhs and a non annualised EPS of just 38 paise, it seems the "Fool" in this deal has been Reliance Money Express.The ADAG consortium is too Big to need a piffling, ludicrous, 38 branch operation of Money Transfer and FX conversion set up under Wall Street Finance which any small Lala is in a position to set up and run. So it is surprising that they even bothered about this useless piece of crap, which they could have done without considering that they already run a 9000 branch operation under Reliance Money.In any case the record of listed Forex changers in India has been poor throughout the past 20 years. LKP Forex got sold to Thomas Cook and Thomas Cook got sold to the Gulf Sheikhs. When concerns like LKP Forex and Thomas Cook could not make any money in this business, it quite possible that no one else can. Afterall, all these FX converters do is to make small commissions on currency conversions, and even smaller commissions on carrying out Money Order type of Post Office operations.At the same time all these currency changers carry massive amount of overnight Risk on currency fluctuations on Money in the pipeline and Money held as Stock in the form of Travellers Cheques and Currency Notes.To me it seems the stock is worthless, and inspite of Mr.Anil Ambani's track record in selling R-Power and RNRL to the mass public, this will be another shabby front like Adlabs, Rcap, Reliance Infra and Reliance Industrial Infra who's only purpose in life is to compete with larger industrialists without having a core, structured team on the ground. The Wall Street Finance deal is worth pennies for Mr. Ambani and is more like getting rid of a rather rabid type of persistent itch. Sell the damned stock, the Rs 80 crore market capitalisation is just too big to worth a concern that does nothing and has no future


Regards,
Arun
I can be reached at:arunanalyst@rediffmail.com

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