Comparing the growth rates of Zee Network and Zee Telefilms, the former has raced ahead in terms of topline with a 30.76 per cent increase. However, the latter has outperformed in terms of bottomline with a 57.5 per cent rise. One may argue that the contrast is only due to exceptional write-offs of Rs 18.27 crore of Zee Network. But here, one important point has to be noted. Asia Today has written off Rs 9.81 crore related to consideration paid for buying of a film library from ZTL, which can be considered as a recurring item for few more years as the total amount paid was huge at Rs 188.95 crore. So, if this view is taken, ZTL has performed very well in terms of PAT vis-a-vis Zee Network.

ZTL's revenue was up by 13.7 per cent to Rs 70.67 crore. Despite this marginal increase in income from operations, the bottomline shot up due to two reasons. One, the OPM grew by more than 4 per centage points to 42.73 per cent, resulting into 25.8 per cent spurt in operational profit to Rs 30.2 crore. The other is a hefty other income component of Rs 10.43 crore, in the form of interest. The net profit soared to Rs 26.7 crore. Still, the annualised EPS based on the first quarter has fallen as the equity capital has more than doubled to Rs 41.24 crore.

This largely happened as Zee Multimedia's shareholders had been allotted shares in the ratio of 1:1, subsequent to the merger. Zee Network's advertisement income registered a healthy increase of 35.41 per cent to Rs 159.13 crore. Though this figure is more compared to the subscription income, the former is expected to come under pressure with more number of satellite channels being launched by competitors. The biggest contributor to the growth was the superlative performance of recently acquired company Asia Today. Its Earning before Interest Depreciation and Taxes (EBITDA) has jumped up by 159 per cent to Rs 35.78 crore, almost half of the total EBIDTA. It has also got a strong foothold in southern India.

Subscription income will become a major growth driver once the direct-to-operator project ie the pay channel system is implemented. The project promises an encrypted bouquet of Zee channels to cable operators and individual subscribers. Considering the popularity of the channels, viewers will not object to the additional payment. The total number of channels on offer is 18, including Zee Sports and Zee Education, after a year. The total number of channels being offered is 10 at present. The distribution arm, ` Siti Cable', valued at $3.5 bn, will drive the valuation of the scrip. More so, as it has got the potential to deliver Internet on cable.

The share price was trading at astronomically high valuations, but suddenly it has fallen out of favour. Currently, it is quoted at Rs 445. With annualised EPS of Rs 26, the P/E is 17. Looking at the fundamentals, even though the ICE fancy has died, the stock looks undervalued for medium term players.Sebi
The Securities and the Exchange Board of India (Sebi) has been in hyperactive mode of late. Sebi has come up with a lot of positive moves like IPO listing norms for infotech companies and Internet start ups, rolling settlement for group A scrips, directives on vanishing companies etc in the past couple of weeks. However, it has botched up on the major issue of going in for the 100 per cent book building issue.

Sebi has announced its intention of scrapping the 90 per cent book building exercise in favour of the already announced 100 per cent book building route. Although the 100 per cent book building was okayed by the board in April this year, it is yet to take off. The delay is difficult to comprehend. Apprehensions are being voiced over the legal grounds of the issue. According to Sebi sources, it is yet to be ascertained if the provisions of the 100 per cent book building issue contravenes any provisions of the Companies Act for the fixed price portion.

If it is so, then Sebi ought to have examined the issue in its board meeting before approving the decision. Anand Rathi Securities director Kamal Sen opines that the 100 per cent book building norms should be brought in as soon as possible since this would ensure " fair price discovery and transparency" in public issues. The delay has caused a lot of confusion amongst merchant bankers who are in a dilemma with their forthcoming issues.

Also, the directive on mutual fund advertising is a welcome move. This will help curb misleading advertisements. Mutual funds now would have to give annualised yields for one, three and five years or since their inception. For funds launched less than a year ago, only total returns are to be given. Sebi has also announced guidelines for the disclosure norms for the ranking of mutual funds. This is an important step by the regulator since a couple of players have jumped in the fray for ranking mutual funds. Such rankings could play on the minds of small investors and can easily influence their investment decisions and hence regulation is all the more important. These measures will investors learn more about transparent regulatory norms.

Another positive move is the IPO norms for infotech and Internet start ups. Now, unlisted companies from this sector need not have a track record of profits in three out of the previous five years, provided the issue is launched through the book building route.

In such a book built issue, 60 per cent has to be allotted to Sebi registered institutional investors, mutual funds and venture capital funds. Twenty per cent of such issue has to be brought in by the promoters. This contribution shall have a lock-in of three years. The remaining capital brought in by the promoter's relatives or friends etc shall have a lock-in KSESH (with contributions from Manish Joshi and Sachchidanand Shukla)