Is's Share Price Justified?

| About: India (REDF)
This article is now exclusive for PRO subscribers. India Limited (Nasdaq: REDF), India’s number one internet portal, reported its Q1 numbers on Thursday July 20th, 2006 (conference call transcript). Investor’s applauded the numbers and sent the stock up almost 17%.

Let’s look at the highlights of the quarter:

* Revenues for the quarter ended June 30, 2006 were US$5.78 million - 37% YoY increase (Rediff didn’t provide QoQ numbers and I am not sure I can use last quarter’s number due to the foreign exchange fluctuation).

* Portal Revenue: $4.06 million - 52% YoY increase - Good growth but Sify’s (Nasdaq: SIFY), closest competitor, portal revenues grew by 96%. However, Rediff is India’s leading internet portal and its portal revenues are almost three times as much as Sify’s (SIFY).

* US Publishing revenues: US$1.72 million - 12% YoY - This includes publishing a newspaper for the Indian community in the United States.

* Gross Margins increased to 78% for the quarter, compared to 69% for the quarter ended June 30, 2005.

* Net Income was US$1.98 million compared with US$53,000 YoY

* Registered users grew by 20%, same as they did last quarter, to 45 million.

* Top 10 advertisers = 55% of advertising revenue. This metric increased by 2% YoY.

New services offered by Rediff:

* Launched a beta version of its popular web-based mail service with new features that provides users an experience akin to the Outlook desktop client.

* Launched a new home page with Web 2.0 features.

* Rediff Classifieds had 149 categories of ads and more than 130,000 listings.

All in all, Rediff had a good quarter. The stock is currently back to earth from its earlier highs in the mid-30s. Still, with a market cap of $380 Million and a PE ratio of 128.27, are such prices justified?

REDF 1-yr chart:

REDF 1-yr chart