The Future of Indian Internet Stocks-Comparison with US and Chinese Internet Stocks.
History repeats itself, they say. Nowhere is it more true than in the investment world-patterns of greed and euphoria followed by fear and depression repeat themselves like clockwork in the stock markets.
Let's turn the Wayback Machine to the beginning of Year 2002. The nasty bear market in the US which started in the year 2000 after the dot com collapse was just about coming to an end. You were seeing signs of meltdown-they were throwing away utility stocks, financials, anything-and of course the disastrous Techs. Yahoo was trading at 6 dollars (split adjusted-now it is $40), Amazon was $7 (now at $47). SINA and NTES and SOHU, the Internet upstarts of China (a country whose Internet sector no one even talked about in 2002; everyone was too busy moaning about the billions of investor wealth lost in the US Internets). The Chinese Internet stocks were all single digit stocks of a third world country.
And then it started. The US Internets started to rally, and the tide took the Chinese Internets up, up and away. The Chinese companies were specially good at combining the Internet with the mobile phone to make money(selling ringtones downloadable off the Internet), and games on the Internet. The American Internets were transforming themselves into Media Powerhouses (YHOO, CNET) and Online Marketplaces (EBAY and AMZN). The US and Chinese Internet stocks would keep rallying for the following years-making believers and investors large amounts of money. Some of that billions of dollars of lost wealth in the dot com bust would be recovered.
India is where China was in 2002. The Internets were just starting to take off. They would login amazing gains in the following years-an investment in NTES, SOHU and SINA combined would have taken your wealth up more than 7 times (invested in equal dollar terms in these three stocks). The Indian Internet sector is at the beginning of a multi-year growth cycle-SIFY and REDF will continue to grow their revenues at torrid rates for years to come. Possibly even more than a decade. This is a country where people embrace Technology quickly--and the Government is no China-they are open and democratic-not putting useless restrictions on the proliferation and use of the Net. Result-the Indian Internet sector in 5 years will be a completely different one from where it is right now---you will hear about giants of the Internet from India, just as you hear about Infosys (INFY) and Wipro (WIT) for their remarkable Outsourcing Business today. Being the dominant country in Asia together with China, it is conceivable that the Indian Internet companies will start making inroads into other countries of the region-Pakistan and Bangladesh are obvious markets. These are HUGE populations-and as the Internet penetrates this part of the world-as it surely will-fortunes can be made on astute Internet Investments.
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Sanjay John G.
Let's turn the Wayback Machine to the beginning of Year 2002. The nasty bear market in the US which started in the year 2000 after the dot com collapse was just about coming to an end. You were seeing signs of meltdown-they were throwing away utility stocks, financials, anything-and of course the disastrous Techs. Yahoo was trading at 6 dollars (split adjusted-now it is $40), Amazon was $7 (now at $47). SINA and NTES and SOHU, the Internet upstarts of China (a country whose Internet sector no one even talked about in 2002; everyone was too busy moaning about the billions of investor wealth lost in the US Internets). The Chinese Internet stocks were all single digit stocks of a third world country.
And then it started. The US Internets started to rally, and the tide took the Chinese Internets up, up and away. The Chinese companies were specially good at combining the Internet with the mobile phone to make money(selling ringtones downloadable off the Internet), and games on the Internet. The American Internets were transforming themselves into Media Powerhouses (YHOO, CNET) and Online Marketplaces (EBAY and AMZN). The US and Chinese Internet stocks would keep rallying for the following years-making believers and investors large amounts of money. Some of that billions of dollars of lost wealth in the dot com bust would be recovered.
India is where China was in 2002. The Internets were just starting to take off. They would login amazing gains in the following years-an investment in NTES, SOHU and SINA combined would have taken your wealth up more than 7 times (invested in equal dollar terms in these three stocks). The Indian Internet sector is at the beginning of a multi-year growth cycle-SIFY and REDF will continue to grow their revenues at torrid rates for years to come. Possibly even more than a decade. This is a country where people embrace Technology quickly--and the Government is no China-they are open and democratic-not putting useless restrictions on the proliferation and use of the Net. Result-the Indian Internet sector in 5 years will be a completely different one from where it is right now---you will hear about giants of the Internet from India, just as you hear about Infosys (INFY) and Wipro (WIT) for their remarkable Outsourcing Business today. Being the dominant country in Asia together with China, it is conceivable that the Indian Internet companies will start making inroads into other countries of the region-Pakistan and Bangladesh are obvious markets. These are HUGE populations-and as the Internet penetrates this part of the world-as it surely will-fortunes can be made on astute Internet Investments.
Subscribe now to The Wall Street Journal and get up to 8 weeks FREE
The Prudent Speculator -- Ranked #1 by Hulbert for 10, 15 and 20 year performance...Click Here!
If you subscribe to the Wall Street Journal or the Prudent Speculator(a Forbes.com publication) using the links above, I get a commission.
Sanjay John G.
4 Comments:
I like you idea about Indian internet stocks, but I think the big move has been missed. If you will examine a long-term chart of India internet stocks and china internet stocks, they have exactly the same pattern and return. The recent big move occurred between 2003 and today.
What market participants buy is the future. You are right, a big move has been made between 2003 and today, but more fireworks are to come from the Indian Internet Sector. As I mentioned in a previous post, the market cap of REDF and SIFY together is about $1B. Compare that to the US Internet Giants (YHOO, GOOG, AMZN, EBAY) market cap of about $250B and the Chinese Internets of $8B(SINA, SOHU, NTES, SNDA, BIDU) and you can see where Indian Internet sector will be in a few years. SIFY and REDF are the prime players, but others will join the party. Watch out for news from Naukri.com, Shaadi.com---these are big companies and businesses in India.
Sanjay John G.
Sanjay,
Excellent although the macroeconomic picture will also impact SIFY and REDF. If it is shitty, these will not be able to realize their true potential.
Another wild card is the sensex ...what if it crashes from 9700...
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