Media stocks hit upper circuit of 8 per cent

Our Markets Bureau

Mumbai, May 15: AFTER a three months’ lull, the battered media stocks from tinsel town were once again in the limelight on Tuesday following RBI’s clearance of the scheme for financing films and film producers.

All frontline media stocks including Zee Telefilms, Balaji Telefilms, Mukta Arts and Tips Industries were in great demand on Tuesday with the counters hitting their upper circuit of 8 per cent.

The RBI on Monday allowed banks to finance the film industry. It stated that this applied only to “projects where the total cost of production of a film did not exceed Rs 10 crore.”

The central bank further said that banks had to obtain a detailed budget for each film, which also indicates the means of financing the same. Following the announcement of these guidelines, all leading media stocks, which remained subdued after the arrest of the big operator Ketan Parekh, registered renewed interest on Tuesday and witnessed huge volumes with handsome price gains.

“This clearance would help the industry as a whole and will give it tremendous impetus,” said a dealer with a prominent brokerage firm.

Zee Tele was one of the most active counters with the stock clocking a turnover of Rs 59.71 crore when 53.75 lakh shares changed hands only at the BSE. The price remained frozen at Rs 114.15 as compared to the previous close of Rs 105.10.

Balaji Telfilms hit the upper circuit filter of 8 per cent to remain frozen at Rs 147.45 and the counter registered a combined volume of 9.50 lakh shares at both the BSE and the NSE.

Similarly, Mukta Arts clocked a trading volume of 2.19 lakh shares at both the exchanges. It remained frozen throughout the day at Rs 132.70.

Tips Industries was also locked in the upper circuit of 8 per cent at Rs 62.70 and a volume of 1.70 lakh shares was registered at both the bourses.

Ordinarily, producers are required to bring in at least 25 per cent of the project cost as promoters’ contribution. Producers are also required to tie up the advances from distributors in the usual course as per the usual practice (sales advances) to cover 35-40 per cent of the budget.

Thus, bank advances could be for the balance requirement of 35-40 per cent of the project cost.