Business of the Company
The company provides domain registration, website hosting, and server collocation
services. The company also provides IP telephony services in India and abroad.
Market Conditions
In general the number of websites coming up is picking up in the country and
the company is in a fast growing industry.
However this is also a market, which, is globally competitive, and the company
has to face competition from a large number of players, as the boundaries are
not defined by geographies in the virtual world. There are established players
already in the field and the company will have to face fierce competition from
them.
Financials
The company plans to float its shares at a price of Rs.20, the face value of
the given shares are Rs. 10. The revenues of the company have consistently grown
from 13.37 lakhs in 99-00 to 3228 lakhs in 2003-04. The earning per share however
has declined from Rs.1.70 in 01-02 to Rs.1.15 in 03-04. While the net profit
before tax has grown decently the provision for taxation has grown at a rate,
which was much higher than, the growth in revenues and this has culminated in
the lower EPS.
Market Shares
The following table shows the market shares of the company in the various fields
that it operates.
| S. No. |
Service |
Market Share (Estimates) |
| 1 |
Domain Registration |
20% |
| 2 |
Web Site Hosting |
15% |
| 3 |
Server Co Location |
15-20% |
| 4 |
Internet Telephony |
20% |
| 5 |
Internet Access |
5% |
| |
| Source: Draft Prospectus |
|
Listing in Delhi Stock Exchange
The shares of the company have been listed in the Delhi Stock exchange since
April 2002 and there has been no trading since that time. This is a significantly
worrying factor.
Peer Comparison
| Company |
EPS |
PE Ratio |
RONW |
| Net4India Ltd |
1.15 |
15.63 |
6.42 |
| MTNL |
15 |
7.70 |
12.46 |
| VSNL |
12.80 |
16.00 |
7.05 |
| |
| Source: Draft Prospectus |
|
The peer comparison shows that the return on net worth is lower than the other
companies and that the company is demanding a P/E valuation, which is akin to
the more established VSNL.
Conclusion
Since the company is in a highly competitive market, there are players who
have resources much larger than the company itself, the broad markets themselves
at an all time high waiting for corrections and the company does not having
a proven track record over a long period of time it seems best to avoid this
IPO as there seems to be a more than decent chance of investors getting a chance
to enter the counter at a lower valuation than what is being offered at a later
date.
The table below lists other stocks in this section
which also belong to the I.T. Sector.
I.T.
