Comparing the Two Indian Internet Stocks REDF and SIFY

This article has 7 comments:

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  Josh

  Aug 30 09:18 AM
  I have traded REDF dozens of times over the past 4 years, on both the short and long side (no position now). The important thing to realize with this stock imo is that it does have a tendency to make strong runs. Its online business is improving (we should net out the publishing business because nobody gets those kind of valuations for a magazine). However, the revenue ramp remains pathetic. After 4 years of adding everything from phone card sales to auctions to SMS to VoIP to games to blogs to contextual advertising, you would think REDF could manage to show some top line growth. REDF is not showing the growth of a GOOG or even a BIDU. SIFY is also fairly pathetic at delivering results (which is why the parent company cut it loose). To me, this indicates that the Indian market is ready for another player to come and take it by storm. Granted, REDF and SIFY could be a target for a company looking to enter this market, but we have seen a lot of Indian internet plays come and go. Can you name the largest market cap. Indian internet play in 2000? I can, as I still have some short shares that I cant cover since there is no market for it anymore. Global Online India (GOLX) once had a market cap of over $500M. Now it is worth less than $100k. I dont think REDF shares the same future, but it is certainly not the Google of India.
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  David
  Jackson

  Aug 30 02:37 PM

  My Website
  Josh,
  Have you looked at the Indian telco MTE? Wondering what your thoughts on it are.
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  Josh

  Aug 30 04:10 PM
  David,
  I am no expert on Indian stocks, so please take this with a grain of salt. MTE is I think primarily govt. owned. I hate that situation, and will stay away for that reason alone. Last I looked, the ADR's traded at a pretty large premium. Another black mark in my book if that is still true. That said, the chart looks decent but not inspiring, and the fundamentals seem reasonable.
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  srjoshi41

  Sep 03 03:49 PM
  Being Govt undertaking is not a sin.MTE has the best infrastructure compared to private sector companies. It has largest landline & mobile network. It caters to Mumbai and Delhi where max subscriber base is located.Till now it had monopoly status. But after private parties came in its share in mkt has not gone down much.Rs.10 face value share is Rs 130 speaks for itself. Good dividend payout, no lack of funds for expansion, good demand potential in Metrocities it serves make the stk atractive on long term basis.
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  David
  Jackson

  Aug 31 01:51 AM

  My Website
  I wonder whether some people will be attracted by the large dividend yeild. Also, do you have any sense how large MTE's wireless business is, and what the competitive environment is for that?
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  srjoshi41

  Sep 03 04:30 PM
  MTE's mobile network is large and their subscriber base in wirless is largest among all players in Mumbai. Their prepaid calling card is always in great demand. Their cell network is effective and coverage is good. Only problem is that their decision making process is slow. Their actions are reactive rather than proactive or agressive.But subscribers get attracted due to good coverage within city limits.As far as ADR is concerned it is good to stay invested as telecom revolution in India has gatherd momentum and govt acked companies are likely to be benefited. There will be usual up and down in price but at the end it shd give good results. This my personal opinion with usual disclaimer clause. I have small holding in India in MTE though not in ADR
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  srjoshi41

  Aug 31 11:36 PM
  While comparing the two you cannot miss out VSL. VSNL was the first company in India to introduce Internet in India and is much bigger in all respects than these two. Moreover it is now manged by one of the most famous industrial group of Tatas.