Global research firm Nomura expects a strong quarter for India’s media industry, led by earnings recovery and a low base. We take a look at the global research firm's top stock bets from the space.
Global research firm Nomura expects a strong quarter for India’s media industry, led by earnings recovery and a low base. “The companies will benefit from low base due to demonetisation last year,” the research firm observed in the report adding that it expects advertisement revenue to recover 15% as compared to the previous year.
The Japanese based firm is bullish on the shares of Zee Entertainment Enterprises, Sun TV Network and Dish TV India. Interestingly, while Sun TV shares have shown marked outperformance in the last one year, after Star India won the media rights for the Indian Premier League (IPL) for over Rs16,000 crore for a period of five years, shares of Dish TV have been a laggard in the previous year.
Sun TV shares were trading flat at Rs 1,033.4, up by more than 1% on NSE on Thursday afternoon. Zee Entertainment shares were trading flat at Rs 580 this afternoon. Nomura expects an 18% CAGR in advertisement revenue for the company over FY18-20.
The media player’s consolidated profit grew by a whopping 148 percent year-on-year to Rs 590.80 crore in the September quarter, largely led by proceeds from sale of sports broadcasting business and other income. Another global research firm CLSA says had raised the target price on the shares to Rs 707 from Rs 660 earlier. CLSA says that the company is favourably placed to leverage a pick-up in advertising post GST rollout. Further, the firm observed that gains in both network and GEC viewership are extensive.
Media industry is the next big wealth creation opportunity says ace investor Porinju Veliyath. In a recent tweet, the expert shared that he’s looking at the media and entertainment space. He sees a lot of opportunity in the sector as media space still doesn’t command a very high market capitalisation. Porinju Veliyath told CNBC TV18 recently that he had always been bullish in the media sector.
“There’s a lot of growth opportunity for smaller unlisted entities to enter the space as India is a huge market with 1,300 million people and there’s hardly any market capitalisation,” he told the channel. In an interview with ET Now in September-17, Porinju Veliyath said “I like two mid-cap media stocks currently, Zee Media and Balaji Telefilms. Investors could explore and try to understand the business model and their relevance for the future. We hold both the stocks in our portfolio (PMS).”