REDF and SIFY Market caps
REDF and SIFY as of today had combined market caps of approx $1B. Compare that to the US big 4 market cap (big 4 being YHOO, EBAY, GOOG and AMZN) of $250B. There is a lot more growth to come in India in the coming years, and you can bet that REDF and SIFY will have a good share of the Internet pie.
The risks with these companies are obvious: they are volatile, have a lot of emotional investors, and the management may not be able to execute properly. New competitors will be born in the Indian Internet sector, and we will keep a tab on them here, at least when they are public. Good Internet companies in India are shaadi.com (a matrimonial/dating site, akin to Match.com and Yahoo Personals) , naukri.com (which is like monster.com, a jobs site), etc.
Sanjay John G.
The risks with these companies are obvious: they are volatile, have a lot of emotional investors, and the management may not be able to execute properly. New competitors will be born in the Indian Internet sector, and we will keep a tab on them here, at least when they are public. Good Internet companies in India are shaadi.com (a matrimonial/dating site, akin to Match.com and Yahoo Personals) , naukri.com (which is like monster.com, a jobs site), etc.
Sanjay John G.
3 Comments:
Thx for the info. A gud indian company is indiamart.com
Sanjay,
Should the market cap of Rediff or Sify have any correlation to the revenue opportunities that these two busineses have?
Take for example, REDF. Its Revenue streams are:
1. Internet Advertising India
2. Internet Advertising US
3. India Abroad Newspaper (subscripton and Ad revenues)
4. eCommmerce
5. Mobile VAS
Currently these streams result in an annual revenue of $10-$12 million. (Of these India Abroad revenues are about $5 million and are declining). When do you think Rediff Revenues will be $100 million (and Net Profis of $10 million) so that the current market cap can be justified?
Indian Internet Advertising revenues will always be a fraction of Total Ad Spend in India which is curently $1.2 billion annually. Total Indian Internet Ad spend was about $20 million or so.
4 or 5 are currently so small that Rediff does not even break these out.
Sonal,
Should the market cap of Rediff or Sify have any correlation to the revenue opportunities that these two busineses have?
Yes, valuation in the end is a function of revenues and profit margins (profits), and for super growth stocks like SIFY and REDF, where the cash generated is invested back in the business, gross revenue becomes an important metric to measure the strength of the business.
When do you think Rediff Revenues will be $100 million (and Net Profis of $10 million) so that the current market cap can be justified?
Revenues of $100M I expect in 2009-2010. Your assumption of $100M revenue bringing in $10M profits is too conservative.
The current market cap is $600M for REDF. YHOO trades at 10X revenues, and GOOG trades at 25X revenues, approx. Assuming REDF to be somewhere in the middle, lets say 15X revenues, the revenues should be about $40M. The stock might be a bit extended right now, but $40M should be Rediff's revenue in 2007. Stock market history tells us that people will pay up for a giant in the making...
Indian Internet Advertising revenues will always be a fraction of Total Ad Spend in India which is curently $1.2 billion annually. Total Indian Internet Ad spend was about $20 million or so.
Expect these numbers to explode in the years to come. Improving Indian economy and a larger number of internet users will have a domino effect---these numbers will grow faster than the most optimistic estimates for the next 5-20 years.
-Sanjay John G.
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