VC Interest growing in the Consumer Internet space in India
Promod Haque, the managing partner of Norwest Venture Partners, recently in an interview with Hindustan Times talked about the Consumer Internet Space in India. By the way Promod Haque was ranked the Number 1 VC by Forbes in 2004.
Here’s the excerpt from his interview:
The Indian internet landscape is exactly where the Chinese market was five years ago — A burgeoning middle class, an aggressive broadband rollout, incremental increase in PC and mobile penetration. So the time is ripe for venture capital to flow back into portals and online businesses that have a proven business model. We are also armed with more experience to recognise a rogue company when we see one. It is matter of evolution, the Indian market is just right for the consumer internet space and that is why we decided to join hands with Reliance and TV18 for Yatra. We expect to close a few more deals in the next couple of months.
Indian Portals are booming right now as both, Nasdaq listed, SIFY and REDF are on a roll right now. The growth is going to continue as the user base doubles in the next couple of years. With the India Internet sector evolving and maturing, adverstising revenue will continue to grow and attract interest in local portals by the big players like Yahoo and Google.
SIFY is obviously a buy right now as they will be declaring profits this quarter when they release their 4Q earnings. REDF, although a good long term play, is very speculative right now. It’s market cap is not justfied at this price point. REDF will be good buy in the teens. Either way the future is bright for both companies.
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February 23rd, 2006 at 12:11 pm
You say SIFY will be declaring profits this quarter.I understand that you are big SIFY fan from all your previous articles but how can you say for certain that it will be making profit.Aren’t you letting emotions come into play here.
February 23rd, 2006 at 12:47 pm
SIFY’s CEO in an Interview with Dow Jones mentioned that they will be profitable this quarter.
Here’s the excerpt:
Sify, whose CEO last week predicted the company will turn its first-ever profit in the fourth quarter, added $2.55, or 24 percent in the regular session to close at $13.33 on the Nasdaq, and added another 12 cents in the after-hours session. Rediff.com, which saw a jump of $5.13, or 22.1 percent in the regular session to close at $28.35 on the Nasdaq, gave up 35 cents aftermarket.
Following is the link to the story:
http://biz.yahoo.com/ap/060206/aftermarket_movers.html?.v=1
February 24th, 2006 at 6:44 pm
But, what about Sify’s long-terms prospects ?
In the Broadband space, they would remain niche players, the bigger telcos who anyday have an advantage
Cybercafes - well, the model is correct, but is the franchisee selection right ?
Dial-up — dying
Portals - can it compete with the slickness of Rediff and the content depth of Indiatimes ???
Enterprise business - sure, hold promise, but then again, it would be up with VSNL, Bharti & Reliance here. tough game
February 26th, 2006 at 2:19 pm
Broadband: I agree that the Broadband busiiness might not be the long term answer. The only hope is getting into WIMAX.
Cybercafes: It’s a good busines and I think the Franchise model is the right way to go. Building your own Cybercafes would be huge undertaking and would require a lot of capital.
Dial-up - Need to get out of it.
Portals: They are trying to grow their Portal business as seen by SIFYMAX. This is huge and they need to focus heavily on it. They have hired a new person to head the portal division and I think you can see the difference. We need the exact hits all their portal properties generate (SIFY.com, SAMACHAR.com, SIFYMAX.COM). In Portals the only way to go is UP.
Enterprise Business seems to be going very well by the numbers and growth.
If you look at their growth and revenue SIFY is still an undervalued stock in a Red Hot market.