People are now more dependent on internet connections than ever before, be it for our everyday work, education, shopping, or even attending weddings.
According to the IAMAI-Kantar ICUBE 2020 report, the number of active internet users in India is expected to grow by 45% over the next four years and reach 900m by 2025 from around 622m in 2020. The report defines an active user as someone who has accessed the Internet at least once in the past month.
The Internet ecosystem will need to evolve to meet the specific needs of this emerging demographic.
And the top Indian internet stocks will be at the fore, leading the charge.
Here is a list of 5 stocks that will help boost India’s internet economy.
1. Info Edge
With a portfolio of brands, Info Edge is India’s leading online classifieds firm. It is one of the oldest internet companies in India.
It owns Naukri.com (online recruitment), 99acres.com (online real estate), jeevansathi.com (online matrimony), and shiksha.com (online education service).
It also acts as an investor and has invested in several start-ups in the online space and is aggressively expanding its investment portfolio.
The company also became the first institutional investor to back food delivery start-up Zomato, which recently got listed on the stock exchanges.
Info Edge posted a strong quarter for the quarter. On a sequential basis, revenue increased 10.2%, primarily led by recruitment revenue.
The company is witnessing a healthy improvement in billing in the IT & ITeS segment (50-55% of revenue), higher renewals, new customer additions, higher demand from job seekers, better branding and improved pricing.
In addition, Info Edge has performed well in the last one year, delivering 91 per cent returns to its shareholders.
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2. Indiamart Intermesh
Indiamart Intermesh is an India-based online marketplace that connects buyers with suppliers.
The company’s online channel focuses on providing a platform to small and medium enterprises (SMEs), large enterprises as well as individuals.
The business for the company largely comes from SMEs. The platform makes it easy for buyers and suppliers through its offerings that include marketplaces, convenient price discovery, intelligent connect and easy and secure payments.
The business has 71 million products from 56 different industries listed on its website making it one of the most diverse markets in the country.
Indiamart Intermesh made a great start to 2019. Since then, the company’s shares have risen 799%. ₹8,744 from the issue price of ₹973.
The rally indicates that investors who have bought one lot of Indiamart Intermesh ₹14,595 has made a profit of more ₹1.3 lakh.
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3. IRCTC
Indian Railway Catering and Tourism Corporation (IRCTC) is a Mini Ratna (Category-I) Central Public Sector Enterprise under the Ministry of Railways, Government of India.
It is engaged in Catering and Hospitality, Internet Ticketing, Travel and Tourism, and Packaged Drinking Water (Rail Neer).
IRCTC has a monopoly in the travel support services sector. It is the only entity authorized by Indian Railways to provide catering services to railways, online railway tickets and packaged drinking water at railway stations and trains in India.
It has a leading position in terms of online rail booking and packaged drinking water, with a market share of 73% and 45% respectively.
IRCTC posted turnaround results in the June quarter on the back of strong operating revenues.
IRCTC, while announcing its quarterly earnings in August, had also said that its board has approved the proposal for 1:5 share split or sub-division of shares.
The company has fixed its record date for sub-division of equity shares as 29 October 2021 ₹10 each in five equity shares ₹2 each.
Since its market debut, shares of the travel support services firm have been fluctuating. It’s almost turned into a multibagger stock by its IPO issue price ₹320 per share.
Speaking of IRCTC, Rahul Shah, Co-Head of Research at Equitymaster, in his recent video talks about whether the company’s valuation is running ahead of its fundamentals.
In the video, Rahul discusses whether investors should buy more shares of IRCTC or they should exit partially.
You can watch the video here: IRCTC: Buy, Hold or Sell
4. Just Dial
Justdial is the market leader in the local search engine segment in India.
The company provides local search-related services to users across India through multiple platforms such as the Internet, mobile Internet, and telephone (voice) and SMS.
The company’s shares have gained over 129 per cent in the last one year.
The company has also launched JD Omni, an end-to-end business management solution for SMEs. It intends to convert thousands of SMEs to run their business efficiently online and have substantial online presence through its website and mobile site.
In addition, it has also launched JD Pay for instant digital payments for both users and vendors. It also launched JD Social, a social sharing platform to provide curated content to users.
It aims to ease communication between users and businesses through its real time chat messenger.
Last month, Reliance Retail Ventures took sole control of Just Dial. Reliance Retail on 20 July 2021. acquired 13.1 million equity shares of ₹10 Just Dial At The Cost Of Each ₹1,020 per equity share from VSS Mani on the floor of the stock exchange through block window facility.
The acquisition represents 15.63% of Just Dial’s post-preferential issue paid-up equity share capital. Reliance Retail will be classified as a promoter of Just Dial.
5. Cartrade Tech
CarTrade Tech is a multi-channel auto platform provider with coverage and presence across vehicle types and value added services.
The company operates various brands such as CarWale, CarTrade, Shriram Automall, BikeWale, CarTradeExchange, Adroit Auto and AutoBiz.
The platform connects new and used automobile customers, vehicle dealers, vehicle OEMs and other businesses to buy and sell a wide variety of vehicles.
The company generates most of its revenue from transaction fees (57% of revenue).
The company’s other major revenue streams are media: listing subscription and advertising revenue from OEMs, dealerships and other advertisers; Software Services: Market and Software Solutions for OEMs, Dealerships and Banks; auto finance; Insurance; and other value added services.
Its websites and apps handled approximately 2.1 million user sessions per day and average monthly visitors (including apps) in fiscal year 2021 were 25.7m,
The number of vehicles listed for auction was 814,316 and the number of vehicles sold through auction stood at 156,689 in FY 2021 with a conversion rate of 0.8%.
It has expanded its business significantly, with total income growing at a compound annual growth rate (CAGR) of 45.9% between the financial years 2018 and 2020.
The company successfully raised ₹30 billion through an Initial Public Offering (IPO) and made its debut on 20 August 2021.
Since listing, the company has incurred a loss of around 15% against its issue price ₹1,618 per share. Currently trading on CarTrade Tech stock ₹1,374 on BSE.
Apart from these 5 stocks, here is a list of other internet stocks to watch.
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Things to keep in mind before investing in internet stocks
When it comes to technology or Internet stocks, it’s important to remember that numbers aren’t everything.
After all, there are plenty of examples of high-flying companies that didn’t have a penny of profits to speak of, but went on to outperform massively – Zomato being one of the most prominent examples.
That’s because Internet stocks are unique in their ability to grow rapidly and sometimes turn a money-losing operation into a massive cash cow once they reach critical mass.
Well, one must look for companies that are focused on expanding business in India and abroad with excellent technical and business fundamentals, minimal debt, and are available at attractive valuations.
Happy investment!
(This article is syndicated from) equitymaster.com)
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