MoneyGram Bulks Up in India - Analyst Blog


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Yesterday, MoneyGram International ( MGI ) announced the addition of the leading Indian bank, State Bank of India ( SBI ), to its extensive agent network in India.

Consequently, the company's in-bound money transfer service will be available across SBI's 100 key branches in India by the end of the year. The service will be rolled out across more branches later.

SBI is India's largest commercial bank with over 13,800 branches and 25,000 ATMs in the country, along with 131 international branches in 32 countries. Thomas Cook (India) Ltd., which is MoneyGram's super agents in India since September 2011, is also a part of the deal. Thus, Thomas Cook's clients will be able to access in-bound remittances into I ndia through SBI.

MoneyGram already has an extensive network in India, with about 34,000 locations and alliances with India's premier natio nalized banks such as Bank of Baroda, Allahabad Bank, Axis Bank and Vijaya Bank.

Additionally, in September 2011, the company announced an alliance with India Post to provide instant in-bound money transfer service in India. The service is currently available in only 100 post offices of India Post. However, the number will be increased in phases to a bout 5,000 by 2014.

MoneyGram's growing network in India is expected to generate substantial revenues for the company, as India is the world's largest recipient country of remittances and the second largest emigrating country, as per The World Bank's Migration and Remittances Factbook 2011. The country received about $55 billionas in-bound remittances in 2010.

Earnings Review

MoneyGram reported third quarter 2011 earnings per share of 3 cents, in line with the Zacks Consensus Estimate but significantly higher than the loss of 30 cents in the year-ago quarter.

The Zacks Consensus Estimate for MoneyGram's fourth-quarter 2011stands at 32 cents per share, up about 112% year over year. Of the 4 firms covering the stock, one revised its estimate upward, while no downward revisions were witnessed in the past 30 days.

Currently, the earnings for 2012 are expected to be around $1.09, up 111% year over year. MoneyGram competes with Western Union Co. ( WU ). The company carries a Zacks #1 Rank at present, which translates into a short term Strong Buy rating.

MONEYGRAM INTL ( MGI ): Free Stock Analysis Report
WESTERN UNION ( WU ): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: MGI , SBI , WU

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