Media industry valuations hit the roof

HT Media IPO priced at Rs 530 a share.

The valuation of the media industry has shot through the roof with HT Media setting its initial public offer (IPO) price at Rs 530 for a share of Rs 10.

Its book-built public issue hit the market on August 4. At a price of Rs 530 a share, the market valuation of HT Media will be around Rs 2,500 crore. The market cap will be even higher as analysts say the listing can be at a premium.

HT Media will top the market cap ladder in the sector, which is now occupied by NDTV at Rs 1,433 crore. Deccan Chronicle, which went public in December 2004, is currently valued at Rs 1,207 crore. TV Today is valued at Rs 624 crore and Mid-day Multimedia at Rs 333 crore.

According to Ajit Rajagopalan, vice-president, Keystone India, the media sector has high potential but has under-performed in the past because of very few large integrated players existed. "With the overall upbeat performance of the stock market and the entry of players like Hindustan Times, the media sector is likely to see more merger and acquisition activities in the future," he said. Keystone India, a firm engaged in facilitating investments and trade between India and the US, focuses on the media segment.

NDTV, which went public in May last year, currently commands a 237 per cent premium over its issue price of Rs 70 per share. The NDTV share was listed at Rs 99.40 per share. It is currently quoted at Rs 235.75 on the Bombay Stock Exchange.

The Deccan Chronicle stock has appreciated by 80.77 per cent over its issue price of Rs 162 per share. The TV Today share, which was listed at Rs 181.35 against an issue price of Rs 95, is currently trading at Rs 107.60""up 13.3 per cent. Mid-day Multimedia, which went public in April 2001, has shown a modest gain of 11.9 per cent over its issue price of Rs 70 per share.

The media segment is getting a higher price earning than the BSE Sensex stocks. While the Sensex stocks are trading at a P/E of around 16, media stocks are trading at a P/E between 30 and 90.

HT Media will be traded at a P/E of 90.67 on the basis of its issue price of Rs 530. The company has reported net profit of Rs 27.52 crore at the end of March 2005 and earning per share of Rs 5.84 on an equity base of Rs 47.09 crore. NDTV is trading at P/E of 64.13, Deccan Chronicle at 31.47, Mid-day at 43.77 and TV Today at 38.81.

HT entered the marked with a public issue of 6.99 million shares at a price band of Rs 445 to Rs 530 per share. The issue was subscribed 20.86 times with a total subscription for 145.93 million shares against an issue size of 6.99 million shares.