The Hindu Business Line : Small-cap media firms hog limelight

STOCK of media companies gained sharply on Thursday on expectation of good financial performance in the next few quarters and the stocks being under-owned by the market. However, the interest was limited to companies into content development and filmmaking.

The stock to rise in today's trading included Crest Communication (up 19.54 per cent at Rs 56.60 on BSE), Padmalaya Telefilms (up 17.29 per cent at Rs 73.25), ETC Network (up 14.58 per cent at Rs 41.25). Other stocks to rise included Balaji Telefilms, Mukta Arts, Saregama, Cinevista Communication, Tips Industries, Adlabs, TV 18 and Sri Adhikari Brothers.

Brokers said the interest in media stocks is after a long time. "Media stocks have been ignored for long time. These stocks have been neglected despite good fundamentals," said a dealer with a domestic broking firm.

Another reason for the rise in the stock price is that several FIIs find small cap Indian media companies very attractive at these levels.

According to foreign broking firm CLSA, Indian media sector is headed for good times with all players, from content providers to broadcasters, set to benefit from expected growth in ad spend as well as subscription revenue. "Investors have a wide choice of niche plays to choose from. These small caps have strong creative talents, sustainable niches, proven management skills and the ability to generate superior value in the long run and the current valuations do net yet fully reflect the growth potential," it said.

Brokers feel content companies like Balaji Tele have unique business models. They are moving away from being companies organised around individuals to corporate institutions.

``The continuous need for original television content will drive volumes while superior quality will drive value growth. The fascination of the Indian diaspora (both in India and overseas) for films offers enormous opportunity for the movie companies. Content will also benefit from new innovations in the technology of delivery like multiplexes, digitalisation of theatres, DTH and broadband," CLSA said.