Indian Media & Entertainment stocks have been low profile and not in much demand due to the fact that very few players were present on the stock exchange (Zee Entertainment). Also, as per market experts, investments were low volume because the sector was stagnant initially. The amount of investors investing in the M&E stocks in equity and debt market was not too high.
But the past few years have seen a turnaround and the sector has been witnessing huge surge of investors. The media sector stocks are variably classified into Broadcast and allied sectors (Distribution and DTH players), Print and Publishing, Multiplexes, Radio and Digital. Out of the above, the Broadcast sector is the most robust and highly traded these days. Experts also cite that since the industry is under transition phase and a lot of developments are happening in the sector, the M&E stocks have steadily started to earn their position in the stock market.
“I would rate the health of the sector on stock exchange to be very good. They are almost giving 50 per cent return on investment. The Index is flat and certain stocks are even outperforming expectations. The outperformance is more visible in the Broadcasting beat. Post digitisation Phase II, there would be a further surge in the sector and the stock market should respond to it,” said Ritwik Rai, Media Analyst at Kotak Securities.
DAS implementation has been a big boost for the broadcasting sector. From mid 2011 onwards, since the policy has been put in place, media stocks have been placed as highly bankable stocks. The Print and Publishing industry which is primarily dependent on ad revenues is still to catch up to the pace. As per stock market experts, only a few publishing houses i.e. HT Media, Dainik Jagran Group, and DB Corp have performed well on the exchange and investors are bullish regarding them.
Amit Patil, Media Analyst, Angel Broking shared, “The vernacular newspapers are doing well on stock exchanges. The Jagran Group had a margin of 24-25 per cent last quarter. Same is the case with DB Corp. But other publishers, primarily the pan-India papers, might suffer the wrath of economic slowdown as the ad revenues are going down and print media primarily depends upon advertising (their subscription rates have been almost steady). Broadcasters and DTH players on the other hand, would benefit a lot post digitisation. Sun TV is one of my usual bets, in spite of the fact that it is only confined to South market.”
CNX Media Index over the years
The perception of investors in media stocks has changed drastically in the past few years. In the late 2000s period (08-10) investors were bearish on the media stocks. The picture has changed post digitisation and NSE and BSE witness a huge amount of stock volume trading.
“I am sure something big will happen in the broadcasting industry. Newspapers and publishers were doing well about five years ago, but of-late due to economic slowdown which has primarily affected their ad-revenue, I see a blur picture. The perception is negative. There is a top line and bottom line traction visible with the publishers on the stock exchange,” added Rai.
Devang Mehta, Senior VP and Media analyst, Anand Rathi said, “Media stocks in the equity market have been consistently yielding good RoI. Apart from this, as the media consumption habits across the demographics is changing, the sector prospects look vibrant is the stock market.”
Media stocks as compared to other sectors
When it comes to sectoral analysis, the overall health of the sector has drastically improved in the last few fiscals. The leading subsector is broadcasting and allied services and it is expected that the volume and value of stocks in this segment will only augment with time. However, investors and marketers are very cautious of the Publishing, Radio segments. The reasons attributed to the downfall are low subscription revenues and constant decline of ad revenues.
As experts cite, post digitisation, the future of the media stocks on the exchange would be more vibrant, making it easier for media stakeholders to understand the acceptance and credibility of a certain media house in the stock market, eventually leading to the betterment of the industry.