The Union Budget 2009-10 was pegged to redefine the contours of India’s economic growth and the media sector to a certain extent. However, the Budget was highly muted for the industry, leading to an indifferent stock performance of listed media companies. Analysts feel that the abolition of Fringe Benefit Tax (FBT) and extension of stimuli for the print sector are very broad benefits and do not impact the industry to a great extent.
The stock prices of Deccan Chronicle slumped by 14.57 per cent from the last trading price of Rs 74.15 on Friday, July 3, to Rs 63.35 on July 6. Even HT Media stock prices fell 4.57 per cent to Rs 87.65 from Rs 91.85 on Friday. Jagran Prakashan held on to its position at Rs 72.35 declining by a mere 0.48 per cent.
Giving the reason for the slump in stock prices of print companies, Ritesh Poladia, a research analyst with Dolat Capital, said, “DAVP advertising contributes about 5-8 per cent of the total advertising for print media. An extension of six months on 10 per cent of higher rates and waiver of 15 per cent agency commission does not make a big difference to the revenues of the print companies. There is nothing really for the sector to be excited about.”
Meanwhile, a 5 per cent hike in customs duty on set-top boxes (STBs) was another dampener to the high capital intensive distribution companies. “The 5 per cent hike in customs duty will have a negative impact on the DTH companies and also telecom companies to a certain extent,” said Siddharth Goenka, Research Analyst, JM Financial Institutional Securities. The stock prices of DishTV and Wire and Wireless India (WWIL) went down by 7.71 per cent and 7.48 per cent, respectively. “The market had certain expectations from the Budget like the divestment of PSUs, etc. But as the overall markets slumped, the media stocks went down too,” he added.
Anand Shah from Angel Broking also felt that the Budget did not have any direct implications on the industry and the stock prices were more inclined to the overall sentiment of the markets. “However, a complete exemption from FBT, currently at 20 per cent, and confirmation of implementation of GST by April 2010, will be of a great boost for both print and broadcasting sectors, apart from the film Industry,” he pointed out.
Nikhil Vora, Research Analyst, IDFC SSKI, said, “There was nothing much for media in the Budget except a little tinkering on the print and distribution side. The industry was expecting big steps like opening up of FDI, etc., for the industry, but with this Budget, Pranab Mukherjee is not going to be a popular man among the media circles. It has been a non-starter for the industry.”