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Media & entertainment index beats Sensex by wide margin

Source : BUSINESS_STANDARD
Last Updated: Tue, Jan 08, 2013 19:32 hrs
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The media and entertainment (M&E) industry is not just about glamour, it's also about serious business. During 2012, stocks of listed M&E companies outperformed the Bombay Stock Exchange sensitive index Sensex, twice over.

While, the Sensex gave a return of 26 per cent in 2012, compared to the previous year, the BS Media-Entertainment index gave a whopping return of 57 per cent.

While the government played spoilsport for many sectors, for M&E, the execution of the much-delayed digitisation programme triggered the rally. The analogue signals are being switched off in a phased manner to give way to a more transparent Digital Addressable Systems (DAS) regime. The cable and direct-to-home (DTH) companies, and broadcasters cashed in on this and so did their investors.

For instance, Den Networks, the multi-system operator (MSO) with pan-India presence, saw investors lining up and the scrip leaping up by a whopping 306.5 per cent. Den shares, which were trading at Rs 48.25 on December 30, 2011, closed at Rs 196.15 apiece on December 31, 2012.

Other cable firms like Siti Cable, Sea TV Network and Hathway Cable & Datacom also gave strong returns to their investors - by over 100 per cent.

Jagat Dave, M&A banker and director at Ambit Corporate Finance, says, "Generally in the past, media stocks would mirror GDP and therefore advertising expenditure (adex) growth. However, in the past six months, select stocks, especially in TV broadcasting and pay-TV distribution have been factoring in the favourable impact from roll-out of DAS."

Even broadcasters like Raj TV Network (152 per cent), NDTV (142 per cent), TV Today Network (87.2 per cent), Zee Entertainment Enterprises (87.1 per cent), Sun TV Network (55.76 per cent) and TV 18 Broadcast (40.12 per cent) gave better returns than the Sensex.

However, certain analysts have turned cautious on these stocks. A senior analyst at a domestic brokering firm says, "The media sector has performed very well, but now the companies need to deliver in terms of earnings, otherwise the stocks will fall. The expectations are too high. We are not recommending cable and DTH stocks."

He, however, is bullish on the print sector, which under-performed in 2012. While the HT Media scrip fell 15.63 per cent in 2012, Jagaran Prakashan, DB Corp and Hindustan Media Ventures registered growth of just 9.31 per cent, 21.9 per cent and 26.63 per cent, respectively. "Print sector under-performed because of low ad-growth. Recovery should happen in the next two to three quarters. We should see a 30-35 per cent upside over next year," the executive said.

Meanwhile, Deccan Chronicle Holdings, remained the biggest loser with the scrip falling almost 85 per cent. The company, which was in serious financial trouble, lost the rights of the Hyderabad franchise of the Indian Premier League as it could not furnish a Rs 100-crore bank guarantee.

One other sector, which performed very well within the M&E space, was the cinema exhibition sector. First, a better line-up of movies, which performed on the box-office and later the deal between PVR and Cinemax saw not just these two, but other listed multiplex stocks too, showing good returns.

Dave added, "Multiplexes too have seen increased box-office collections. That, coupled with moves to consolidate the sector, have led to a re-rating of these segments".

However, 2012 remained a year of wait for the radio sector. Leading radio company Entertainment Networks India Ltd (ENIL), which operates Radio Mirchi, managed a 10.30 per cent rise in its stock price in 2012.

Next MediaWorks (Radio One) showed a four per cent jump, while the Reliance Broadcast Network (BIG FM) scrip went down by 14.27 per cent.


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