India Internet - Weaving Web of Wealth; Edelweiss,

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

Since 1994, when it named Internet as the `Person of the year’, Time magazine had as many as 23 covers on events, trends, companies and individuals who influenced the world with their clout on the spiralling cyberspace. Internet has witnessed plenteous success stories, creating billions of dollars of wealth by some nifty and inventive individuals, indelibly stamping its invaluable place in our lives. The World Wide Web has brought together small contributions of millions of people and made them matter more, realising the words of the father of Internet, Vinton Cerf that the Internet lives where anyone can access it. Today, the world acknowledges the indomitable power of the Internet which is taking giant strides in India, especially in e-commerce and social media-tectonic changes that are collectively altering the overall online space. We see India poised on the cusp of an explosion in Internet access and usage over the next five years – akin to the adoption of mobile handsets and tariff cuts in telecom industry.

E-tail market to shoot up 20x by 2016 to USD12bn

We expect the e-tail market to see a multi-fold growth over the next five years, reaching USD12bn by 2016 from current USD590mn. This implies that about 3.5% of the per capita income would be spent online by every transacting user, from less than 2% currently. However, the overall market would still be less than 2% of total retail sales in India. This would be lower than China and the US at over 4% currently.

Internet advertising spend to surge 3x to USD800mn

We expect the online advertising to surge to USD800mn by 2016, expanding its share of total ad pie to ~8.5% from 3.6% level currently. Online medium is an emerging platform which has been globally acknowledged as an interactive medium with high potential. Internet as an advertising medium has many unique benefits, pushing marketers to increase the spending on this platform. Internet potentially will have the highest reach than any other advertising medium by 2016.

Online classifieds market to touch USD700mn

We expect the online classifieds market to reach at least USD700mn by 2016 from the current USD245mn. Spending on classified segments will see a further impetus as activity based search increases with more and more users migrating online. Major beneficiaries in classifieds would be jobs, search, entertainment, matrimony, real estate, education, cars and other general B2C classifieds. However, unlike in the US where the biggest classifieds site is Craiglist (general B2C), we expect India to see vertical classified models emerging in respective segments.

India: Swelling Net heads present prospects galore

To sum up, we think that the Indian internet market is at a stage where China was in 2006 and we see the suitable structural drivers in place for an explosive surge in businesses. Currently, the Indian internet market is shallow and there are lots of emerging players scattered across multiple segments.  But as Jack Welch said, Internet is indeed the Viagra for big businesses hence in India, we see large players emerging in the e-commerce and classified verticals where localization is critical. In areas such as search advertising, global players like Google will continue to dominate. We see businesses that are able to provide smooth consumer experience and gratification will win in the long term while in classifieds and advertisement led models, business that are able to keep consumers engaged through their content related pull will emerge as winners.