The Hindu Business Line : Media stocks back in favour

EVEN as the Sensex breached the historical 6,000 mark, media stocks have once again emerged as favourites against the old economy steel stocks, a trend quite different from that of the year 2003.

A comparison of the two sectors in the first two days of the New Year has indicated that media stocks witnessed a higher growth in market capitalisation compared to the steel sector. A sample of seven main companies in the two sectors indicates that while the market cap of media companies grew by 6.17 per cent, the capitalisation of steel companies increased by just 3.62 per cent.

According to market analysts, there has been greater interest by foreign institutional investors (FIIs) due to the high growth rates the sector could witness.

"The advertising revenues are picking up, films per se have done well in the last few months and, therefore, media and entertainment companies are attractive. There are several companies which can attract better valuations," said a Mumbai-based analyst.

"On the other hand, in case the steel stocks, the hype had been for too long now, with most of these companies witnessing growth of 200 to 800 percentages during 2003. So the increase now will not be like some of the other sectors and the possibility of import duty cut may also hit these stocks," said a senior analyst.

In the recent weeks, shares of Zee Telefilms and Balaji Telefilms have touched a new 52-week high at Rs 166.55 and Rs 112 per share respectively, while other media scrips have been on the upward swing.

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