Media stocks are riding the waves of the buzz generated by the Indian Premier League and general election, and a remarkable 50 percent plunge in newsprint prices. Market experts are optimistic about the sector’s long-term prospects, hinting at potential resilience and future growth.
DB Corp Ltd, for instance, is just about 5 percent away from its 52 week high of Rs 325. Around the same time last year, the company’s shares of the publisher of the Hindi newspaper Dainik Bhaskar, were priced at Rs 1,26.85 each and are now close to Rs 310, an over 146 percent growth in a year.
HT Media Ltd, which has Hindustan Times, Mint and Hindustan in its stable, has seen its share price rise over 45 percent in the past year. In fact, year-to-date gains stood at 17.34 percent.
“DB Corp Ltd has showcased impressive performance over the past two years, registering robust double-digit growth in both revenue and bottom line figures. A significant contributor to this success has been the substantial drop in newsprint costs, which constitute 45 percent of the operating expenses. This has impacted their share prices and it will only grow from here,” said an expert, on conditions of anonymity.
To be sure, the halving of the price of newsprint, from $10,00 per tonne to $500 in a year’s time, has boosted earnings for print media companies and pushed their share prices northwards. However, there is more to it. According to the expert cited above, elections in general place more disposable income in the hands of the public, leading to increased sales.
“This surge in economic activity propels advertising budgets, fostering growth in the media adex (advertising expenditure). Given these favourable factors, we anticipate a positive trajectory for media stocks in the current and upcoming quarters, driven by both strong financial fundamentals and external market dynamics,” the person said.
The positive growth in media stocks is not limited to those in the print media. TV companies, cable TV distribution companies and listed multiplex chains have all benefited in the last one year.
“Network18 Media & Investments Ltd shares are experiencing upward momentum amid merger speculations with Disney Star. The delay in the Sony-Zee merger, which has led to market volatility for Zee stocks, is turning out to be a favourable factor for TV18 stocks. Additionally, the anticipation of positive revenue streams from IPL is another significant driver for TV18 stocks. The foreseeable positivity in IPL revenue over the next five years contributes to the optimistic outlook for the group,” said Brijesh Ail, head, technical and derivative at IDBI Capital Market and Securities Ltd.
TV18 Broadcast Ltd shares have seen 66.26 percent growth in the last one year and a 16.43 percent year-to-date growth. Network18 Media & Investments Ltd has seen a 86.11 percent annual growth in share price and a 33.22 percent year-to-date growth.
Similarly, DEN Networks Ltd has seen an 81.11 percent growth in share price in the last one year, while PVR INOX Ltd saw 4.25 percent growth. Sun Tv Network Ltd saw a 39.44 percent growth in share prices in the last one year.
Overall sentiment around media has been high in the last one year, said experts.
“In India, the media industry, once highly unorganised, is gradually transforming into a more structured sector. Larger companies are acquiring smaller channels, leading to increased reach and stability through consolidation. The ongoing process of organisation is complemented by improved internet penetration, allowing channels to tap into markets in tier II and tier III cities,” said Vivek Karwa, of VRIDHI Investment.
According to Karwa, the digitisation of the industry has brought about more accurate reporting of subscribers, ensuring that companies receive the actual value for their channels.
“The media sector appears to have significant potential for growth, with both long-term factors such as consolidation and digitisation and short-term events like elections and IPL contributing to its positive trajectory. The outlook for the media industry is optimistic, poised for sustained success,” Karwa added.
Disclaimer: Storyboard18 is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
—