Mumbai: The media broadcasting space is abuzz with a lot of news flows, and few stocks have been making good moves. Experts say the stocks they are most bullish on from this sector and the road ahead for this space.
As per analysts who track this sector closely, it is a relatively newer space to look at, but it is definitely poised for good gains ahead. A lot of initiatives related to government policy and regulations, which if implemented as per schedule, could act as positive triggers for media stocks.
Regulation to benefit broadcasters:
News on CAS or conditional access system has been doing the rounds for the past few years. But according to the latest Telecom Regulatory Authority of India, TRAI, ruling CAS should be implemented by December 31, 2006.
While, TRAI has tried to put a ceiling on what broadcasters should demand for each channel, but definitely this system will bring the highly unregulated cable TV market under regulation. TRAI has directed that basic service be provided at not over Rs 77 per subscriber per month excluding taxes, and must include 30 free-to-air (FTA) channels. It also said paid channels will not be allowed to charge more than Rs 5 per month per channel in CAS areas.
Also, services like DTH (direct to home) offered by Dish TV and Tata Sky are catching up alongside traditional cable TV. Most channels will now be paid their dues, under the cable TV system subscribers are always under reported.
Sumit Rohra of Antique Stock Broking says, "I am very bullish on this space, I believe the CAS regulation will help. Just like what happened to the telecom sector a few years back, that is what's happening to media now, it is growing and coming under regulation. Broadcasters will benefit, since there will be revenue sharing."
He adds that it's not just the cable TV guy who will earn, now broadcasters will be paid as well, as per each user. "With the TRAI regulation I think broadcasters will be major winners. So all this will be reflected in the stocks as well," says Rohra.
However, few experts also feel that stocks in this space are rising quickly because of momentum and news flows, and not valuations.
Apurva Shah of Prabhudas Lilladher says, "I am positive on the media sector, but the valuations of stocks is definitely not cheap. Media is a relatively newer territory as compared to other sectors in the markets. So I believe most media stocks are momentum picks. They are news flow driven. News flows regarding CAS as well as IPOs of companies and their subsidiaries is the kind of news that is turning positive for this sector."
But in the same breadth he says that the wind is in the favour of these stocks as of now.
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Zee’s stock has risen over 64 per cent in the last one year as compared to its peers like TV18, which has risen 52 per cent; and NDTV, which has, in fact, fallen by 5 per cent.
Rohra is most bullish on Zee. He says, "I would look at media stocks Zee, NDTV and TV18, in that order. Zee has Dish TV, Citi Cable and Zee news channels under its umbrella, so the company has a lot to offer. The company is also getting ready for a demerger, so I believe after the demerger a lot of value unlocking will take place. This is what excites me about this stock."
Sanjay Dutt of Quantum Securities also has Zee in his favourites’ list.
He says, "I am very positive on the media space on the whole and Zee has been one of my favourites for quite some time right from the Rs 160-170 levels. The story is panning out phenomenally and around December-January when one gets shares of the individual companies, the sum-of-parts will be much higher than what it is today."
However, as of now, Zee is expensive, and analysts say they would wait for a correction to buy it. "In the short term I may want to buy it lower, I may see a technical correction coming in because one has already seen it running up quite a bit. But I like the story, I have to hold on to the stock. I want to disclose that I have it and there is more juice in it particularly because of its DTH operations also. It is the best media play at this point of time," says Dutt.
Shah says, "I would look at Zee on a correction, I like TV18 too. But I am not too positive on NDTV."
Stock:
Close Price: (19/09/05)
Close Price: (15/09/06)
%
NDTV
232.3
219.9
-5.34
TV Today
107.8
77.9
-27.74
TV 18 India
388.05
590.15
52.08
Zee Telefilms
193.65
319.5
64.99
Sensex
8444.84
12009.59
42.21
Strategy:Analysts believe that one must remain long on this sector, and accumulate stocks.
Rohra says, "The media sector is at the threshold of growth opportunity, there will be 50-80 per cent YoY growth. Media will definitely outperform the markets. So I would say one must hold long positions in it."
He says that one could accumulate media stocks now. "If you want to buy say 100 shares, it would be good to buy maybe 50 now, and the rest after some time," he adds.
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