Indian Internet firms, having successfully ridden the dotcom boom-and-bust of the 1990s, are now lining up to sell shares in the domestic market to take advantage of high valuations, company officials said.
Companies such as People Interactive (I) Pvt. Ltd, Cleartrip.com, Rediff.com, MakeMyTrip.com and Sify Technologies are among those planning to list their shares in the next two years. “Yes, we have plans to list...it will probably happen in April 2009,” said Anupam Mittal, chief of People Interactive which owns matrimonial site Shaadi.com and social networking site Fropper.com.
Travel portal Cleartrip’s Sandeep Murthy said he had a time frame of 12-24 months for a listing, while rival MakeMyTrip.com is also planning a share sale.
Nasdaq-listed Rediff and Sify will also sell stock to comply with a government rule requiring them to list locally within three years of reporting profits, which both did in 2006-07.
Listing will provide liquidity as well as exit options for investors such as venture funds. For the firms themselves, it means more finance and visibility to boost growth.
“Presence of more companies will establish Internet as a IPO-able category in India and give more momentum to investors in that area,” said Alok Mittal, managing director of Canaan Advisors Pvt. Ltd, which has funded Bharatmatrimony.com.
Valuation is crucial for a sector with few performance benchmarks. “Naukri and Rediff will serve as comparables for the broad Internet sector - largely around earnings growth and PE (price-to-earnings) metrics,” said Mittal.
At its issue price of Rs320 a share, the only listed Internet firm, Info Edge, was valued at 28 times its March 2007 earnings. The company, which owns Naukri.com and Jeevansathi.com, now trades between Rs930 and Rs950.
However, a rush of listings in the category could well erode share prices by as much as 30%, cautions Mittal.