Media stocks on fire as Sensex tests 7,900 pts

Media stocks rode high in today's trade as all the scrips ended the day with hefty gains. Deccan Chronicle Holdings, up about 19 per cent to Rs 337.55, led the pack.

Mid-Day Multimedia jumped 17 per cent to Rs 95.25 while Sandesh went up about 3.5 per cent to Rs 244.40. The heavy demand for these stocks came in the wake of the Reserve Bank of India notification on August 11 allowing FII investment in print media firms, brokers said.

The Deccan Chronicle scrip had jumped 9.6 per cent to Rs 292.85 in a single trading session last week while the Mid-Day stock had surged 4.7 per cent in just two trading sessions.

According to media analysts, the sector is sure to witness a spate of mergers and acquisitions. The recent instances of big corporates buying into media firms has also brought cheer to media stocks.

For example, Anil Dhirubhai Ambani Enterprises picked up 51 per cent controlling stake in Adlabs, engaged in the multiplex business. Similarly, Temasek Holdings picked up 10 per cent stake in another multiplex company, Shringar Films, for Rs 20 crore.

The valuation of the media industry has also shot through the roof. HT Media is likely to be valued at Rs 2500-odd crore based on its issue price of Rs 530 per share.

HT Media will be second only to Zee Telefilms, which boasts of a market cap of Rs 7072 crore. Next in line is NDTV at Rs 1390 crore, followed by Deccan Chronicle (Rs 1,397 crore), TV18 (Rs 704 crore), TV Today (Rs 649 crore) and Mid-Day Multimedia (Rs 405 crore).

Earlier, the ministry of information and broadcasting had issued a notification permitting foreign funds, overseas corporate bodies, non-resident Indians and persons of Indian origin to invest in Indian newspaper companies.

Following this, Deccan Chronicle Holdings had announced that it would offer up to 9 per cent of its share capital for raising funds through foreign currency convertible bonds, private placement, American depository receipts or global depository receipts, subject to a 5-year conversion period. Similarly, Hindustan Times has reserved its greenshoe option of 6.96 lakh shares.