Yes, absolutely right. Although the way you value SIFY is like to value it like a matured company.
As mentioned in my previous post, I plan to add 5000 shares total this week for 1~3 years play. I normally trade stocks in both long term and short term, for rare opportunities like SINA and SOHU in 2001, I will step in early for tax purposes although I might not be able to get the lowest price.
If the general market falls down, I plan to add another 10K shares. But I won't exceed that number because every stock has risk too.
The condition that I will sell SIFY are:
1. INDIA couldn't grow! Which is highly unlikely
2. INDIA grows into a country like today's China, but SIFY still didn't perform.
3. SIFY rises to $30+. If the market is not crazy about india at that time, I will sell, but if market starts to pay attention to India, I will hold, don't forget that SIFY was once a $400+ stock.
Right now, I don't think any serious investment from western countries have been injected into India's infrastructure except the outsourcing, the tide just get started with the $9B announced days ago.
Also remember they are already spending 11.5M per year towards capex (that's 0.32c/share). Projecting long term 30% rev growth and 30 net margins on addl revenue ...
Year End Rev(M) Net (M) EPS EPS gr%
Mar 2006 107 7.3M .21
Mar 2007 139 16.9M .48 228%
Mar 2008 180 30.0M .84 75%
Mar 2009 234 46.2M 1.32 57%
... at the end of 4 years we have a company with EPS growing at 57% in a still largely untapped market (a 20M broadband users by 2009 still leaves out 1000M more!). Even if you consider a very very conservative PE of 29 (ie a PEG of 0.5, remember PEG of 1.0 is considered appropriate price) the stk price comes at $38.28. That's more than 7 times current price and 55% CAGR ROI at todays stk price.
steddy indian lundie an that why i call meself reddy steddy GOOOOOOOOOOOOOOO bend ova. i
my email is be email@example.com and firstname.lastname@example.org
JEJEJEJEJEJEJEJE. i luvs it
Surya: I see you haven't changed. To be honest: now that I am a grandfather, I realize I am no longer 29yrs old like some of you posters on this Board, and therefore have to become more serious. In all sincerity, time moves very fast, and you should start planning on becoming an adult. CYA and Good Luck
I am not taliking to myself. If you have problem with the management, go talk to them. Generally, I think they are doing well, but they can do better. For example, the revenue grows at 30%~40% year over year in the last 4 years, but the companyis still not profitable because the cost of the revenue grows too. That's typical for a growth company in its early days because they need to spend to establish the business and expand the customer base and establish partner relationship, all that needs investment (cost of revenue). That's why investors should focus on the revenue growth not the earnings in their early days. That happened to YHOO< EBAY, AMZN, .... I remembered that AMZN just turns into profitaibility in less than 2 years(?).
However, the company does need explain that view clearly to the market: 1. India is in its early state, think about it, the PC penetration is exremly low right now, and the broadbannd subscribers are less than 1M (they plan to increase that number to 9M by 2007, 20M by 2010, that's why the govermenet forced down the broadband tariff and invest more in infrastructure). 2. explain the company's strategy more clearly as why not profitable while revenue grows so fast!
Also, I noticed that SIFY will lose 0.11share in the year ending March, 2006. Considering that SIFY lost 0.6/share in the first quarter and will losr 0.6/share next quarter, so the next two quarters (Dec, 2005 and March 2006) should bring 0.01/share profit. So, the turning point is coming in less than half an year! Right time for a 1~3 years investment (pay only long term tax)!
Considering that the revenue is growing 30%~40% consistently, the reveunue (by March 2006) will be $110M, and will add $38.7M by March 2007. Because they will achieve profitibility around Jan. 2006. So there is strong reason to believe that there will be 30%~50% margin for the newly added revenue, that will be $11.6M ~ 19.4M profit, that means 0.33/share ~ 0.51/share. Of course, if they decides to spend more to get more customer, that number will be different.
I think people were expecting too much from this company. Sify has been doing well, consistently increasing market share and sales. Shareholders expectations are they want them to become a google overnight. Sify is a great company with great internet product offerings, and continues to improve operating margins. I think it's just a matter of time before a yhoo or goog partner with them. At 5.00 or so, this stock is a great investment.
BTW, Sify ended the last quarter with a cash balance of over $30 million, so ignore those idiots saying they are broke.
The stock does behave like