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MOMTD: MoneyOnMobile Is Enabling India’s Cash-Based Society to Make Payments and Transfer Cash Without the Bank

By Lisa Thompson


‣ MoneyOnMobile (OTC:MOMTD) is bringing electronic payment capabilities to India’s cash-based ecosystem through a low-cost SMS text based network that allows people with limited or no access to bank accounts, who are half the population, send and receive money and pay bills. Ninety five percent of all consumer transactions in India use cash. MOMT’s time saving network allows consumers to pay bills and/or receive cash by visiting a local retailer and completing all their transactions in one location. For example, instead of visiting the phone, electric and water companies and standing in line to pay in cash at three separate offices, one stop at a MoneyOnMobile retail location lets the customer hand over cash and make payments to all three at once. This service is free to consumers as the costs are born by the company getting paid as it alleviates them of handling cash and staffing personnel to receive payments.

‣ The company allows customers to pay over 50 different providers located through India through an enabled retailer network of 350,000 locations. This includes utilities, mobile phone and cable service, transportation and movie tickets, as well as on-line shopping and transferring money to other people.

‣ The MOMT service not only allows customers to send OUT payments, it also lets consumers get cash out of a bank account where many of them get their paychecks deposited. This also aids the retail location by reducing in its cash drawer and turning it into an electronic balance. It saves the merchant a trip to the bank to deposit cash and puts that cash to immediate use in its account. This service completes the cash cycle at the agent level – cash comes in from bill payment or money transfer transactions then the same cash goes out for a cash withdrawal.

‣ While there are numerous competitive electronic payment system networks available in India, most are based on the customer having a bank account and/or using debit and credit cards.

     • Approximately half of all Indians do not have bank accounts and/or computers or even smartphones and rely on cash. Most Indians are unable to use these card and bank account-based networks.
     • Most of these alternative solutions can only be profitable at higher transaction sizes, as they must pay banking and card fees plus support an Internet based network.

‣ MOMT is expanding its offerings beyond payments and cash withdrawals and now includes selling services such as two-wheel insurance and making loans. In the near future, pending approval from the Reserve Bank of India, it plans to partner with inbound remittance partners to allow it to disperse cash from people abroad sending money home to India.

‣ MOMT is in the process of a rights offering at $6 per share and hopes to raise $4 to $10 million to fund its growth. Given our estimates and peer comparables we believe that MOMT stock is worth $9.50 per share based on an industry average EV to sales of 4.1 times and our calendar year 2018 estimate of $12.7 million in revenues. Given the company’s revenue potential for 2019, the stock price could move to $34 per share based on this multiple.


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