Why Rediff And Sify Are The Darlings Of Nasdaq

CNNMoney.com: When there are only two Indian internet stocks being traded in a US stock exchange, they are likely to flare up if the investors are looking to buy into the India story. So small wonder, while many large U.S. Internet stocks struggled this year, shares of Sify went up by more than 20 percent so far in 2006, while Rediff.com‘s rose 35 percent, mainly on the thesis that India’s internet growth story is for real this time.

George Mihalos, an analyst with Gilford Securities, said that since India has only about 40 million Internet users among a total population of 1.1 billion people, it’s easy to see why investors are excited, especially since Rediff and Sify are the only Indian Internet stocks that trade in the United States.

China is different, however, because it has several of its stocks like Baidu, Netease, Sohu, and Sina, are listed in the US.
Says another analyst, Todd Campbell, president of E.B. Capital Markets, “There is no doubt that there is a tremendous market developing in India because of this relatively explosive growth in their middle class.” The numbers are also improving. Rediff has already turned profitable, while Sify is cutting its losses.
However, the runup in stock prices is also due to the rumours that Yahoo or Google would be looking at buying one of these companies to get a footprint in India. But that may be a far-fetched idea for now, since both the global companies already have a significant presence in India.
An afterthought: I think this should prompt Naukri, Shaadi.com and Times Internet to go in for an overseas listing, of course, after their domestic IPOs.
Related:
Kaufman Bros Initiates Coverage Of Sify And Recommends “Buy” With Price Target Of $17
Digging Below Rediff’s Valuation Numbers

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