Media stocks hog limelight

Backed by big expansion plans and global investors' increasing interest in the country's media and entertainment sector, the share prices of most media companies are trading at their lifetime highs.

UTV Software, Balaji Telefilms, NDTV, TV Today, Raj Television, Global Broadcasting, ETC Networks, Adlabs Films, Saregama India and Tips Industries on Tuesday hit their all-time highs on the Bombay Stock Exchange, on the back of Viacom Inc's announcement to form a venture with Television Eighteen Group.

Viacom, the owner of Nickelodeon and Paramount Pictures, would start an entertainment television channel and enter local programming through the proposed venture.

"The biggest advantage for media is that, it is a non-interest sensitive sector. Most other sectors such as automobiles, manufacturing are directly influenced by change in interest rates. Media companies investing into television, radio and multiplexes have drawn huge capacity addition, some have even plans to double capacity. This is a potential sector," Hitesh Agrawal analyst with Angel Broking said. However, he finds valuations of most media stocks overstretched and said the market has reacted too early.

Media companies' profits have more than doubled in Q4 of the financial year 2007. So far, 22 media firms have declared their financial results for the quarter ended March, 2007 and have posted combined net profit growth of 266 per cent to Rs 162.39 crore against Rs 44.28 crore in same quarter previous year.

Raj Television (Rs 288.30) at 10 per cent and Global Broadcasting (Rs 780.15), Network 18 Fincap (Rs 599.65), Saregama India (Rs 279.10) and Mukta Arts (Rs 95.05) at 5 per cent were frozen at their upper limit circuit on BSE.

While, media giant Zee Entertainment was up 4.38 per cent to Rs 312.10 against its previous day's close of Rs 299, Mukta Arts up 5.61 per cent to Rs 95.05 (Rs 90), Inox Leisure 4.60 per cent to Rs 143.15 (Rs 136.85) and Shringar Cinemas 4.53 per cent to Rs 61.10 (Rs 58.45).