E-commerce industry ready for next growth leg, invest in these 2 stocks for double digit returns

E-commerce comprises only 5 percent of India's retail market which shows that the industry still has a long way to go.

January 18, 2020 / 09:42 AM IST
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We saw the e-commerce industry gradually flourish over the years. During FY19, the industry performed well and recorded higher growth on the back of an increase in internet users, and the easy availability of smartphones coupled with attractive data packages.

The tightening of digital regulation rules and secured internet servers has ended customer worries regarding online payments fraud and brand authenticity, thus gaining consumer trust over time.

As we are in a new decade, e-commerce comprises only 5 percent of India's retail market which shows that the industry still has a long way to go. Most of the people are getting to know this industry and many also strive to carve a niche for themselves by opening up online retail stores.


According to a report, the e-commerce market in India is expected to reach $200 billion by 2027. The number of internet users were 665 million in FY19 is expected to reach around 829 million by FY21. However, it must be noted that 50 million users shop out, of which only 20 million are active users. Thus, a huge section of India’s population is yet to move online.

The sector largely known for apparels and electronics has now added almost everything to its bucket.

To grasp a greater market share, groceries and logistics have been added, which could be some of the biggest boosters. Not only this, the housing ministry launched an e-commerce platform for the real estate sector.

Newer channels such as vernacular interaction, video-related content and omnichannel approaches would help induce consumers into buying more.

The Indian e-commerce industry remains promising and is set for new highs in the next couple of years. Fall in data prices with the growing demand for smartphones would increase content consumption.

Over and above, relentless online shopping has become a fashion culture for the teenage group. The changing demand and lifestyle, growth in the number of shoppers, attractive discounts and deals, faster deliveries, easier returns and access to a large product range would add fuel to this growth.

Below are two listed companies - Info Edge (India) and IndiaMart, which could benefit in the long term.

IndiaMart InterMesh | Target: Rs 2,465 | Return: 15 percent

IndiaMart offers the largest online business-to-business (B2B) marketplace for business products and services. It delivered remarkable results during Q2FY20.

Earnings per share (EPS) increased to Rs 14.9 during H1FY20. In addition, the company has recently launched the IndiaMART Lead Management System. Registered buyers increased by 29 percent. Having a unique business model with limited peers makes the company attractive.

Info Edge (India) | Target: Rs 3,070 | Return: 18 percent

Info Edge property Naukari.com alone has traffic of around 90 percent with a market share of around 70 percent compared to other sites. It has invested in technology startups such as Zomato, Policy Bazaar and Meritnation among others and has the leading classifieds business in India.


Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Moneycontrol Contributor
first published: Jan 18, 2020 09:38 am

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