Returns & revival: Media stocks on the rise, indicate recovery for the sector
Going forward, media companies, especially those with digital offerings, will do very well in the market, predict experts
Even as markets see a sharp fall due to second wave of the Covid 19 pandemic causing an overall sell-off across sectors, including Nifty, media stocks have been performing well compared to same time last year indicating recovery. Media stocks, which have fallen about 8 per cent in the last couple of days, have good prospects in the long term, say experts. Looking at the Nifty PE ratios, the outlook is still positive for media stocks, especially those with digital offerings, say market experts.
The sector that comprises broadcasters, multiplex operators, and the print media was immensely impacted initially due to the lockdown and subsequent drop in advertising revenues. However, towards the end of the first quarter of FY 21, media stocks picked up due to risk-on environment and high liquidity in the market pushing up the prices of mid-cap and small-cap stocks.
“Going forward, media companies, especially those with digital offerings, will do very well in the market. At a time like now, life is more indoors with more number of people watching TV and resorting to media for news, so revenue of media companies should go up and reflect in their stock process,’ said Ashish Kapur, CEO at wealth management and advisory company Invest Shoppe India.
“The space looks interesting and the media stocks should give good returns in the next 2-3 years,” Kapur added.
Looking at some of the stocks in the sector with average price momentum and valuation, Zee Entertainment Enterprises stock value, which touched Rs 135 in mid-April last year, is now at Rs 187.90. Sun TV Network Ltd stocks, which were valued at Rs 349 in mid-April 2020, peaked in early February 2021 touching Rs 551 and is presently at Rs 465.50.
Print that took the worst hit in terms of both circulation and ad volumes also shows signs of recovery. Valued at Rs 47 last year this time, Jagran Prakashan Ltd stocks are now valued at Rs 58 approximately. Likewise, DB Corp Ltd stocks have moved from Rs 82 approximately to around Rs 86 in the last one year.
On the entertainment side, multiplex stocks, like that of PVR Limited, didn’t show much of a difference in prices even after the business came to a complete standstill. In April 2020, the price of the stocks was Rs 1058. It is now priced at Rs1087.
However, when compared to other sectors, media stocks haven’t performed very well. “Nifty media index is majorly influenced by Sun TV and Zee’s stocks, and once we see some good momentum coming in these two stocks, the index will go up. In the last six months or one year, the index has showed an up move but it was not good enough to beat the benchmark returns primarily because Sun TV and Zee have not performed well,” said Ruchit Jain, Senior Analyst - Technical and Derivatives, Angel Broking.
Jain’s advice is to wait it out before adding media stocks to one’s portfolio till there is some momentum in the sector’s performance in the market.
According to another market expert, companies like Sun TV and Network 18 have strong chances of performing well in the next few months. "Sun TV has got some political backing and Network 18 has deep pockets, so we expect these stocks to show some momentum in the new fiscal. On the print side, Jagran Prakashan Ltd stocks look interesting in the present times and can go up to Rs 70 in the next few months," he said.
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