The Hindu Business Line : Media stocks hog limelight

A VARIED mix of media and entertainment stocks has been attracting investor attention over the past few sessions as both valuations and fundamentals look good. They include companies in broadcasting, content providers and cable business.

The mix is as varied as NDTV (up 5.99 per cent at Rs 200.05), Crest Animation (up 20 per cent at Rs 116.40), Mukta Arts (up 2.90 per cent at Rs 49.60) and Padmalaya Telefilms (up 3.63 per cent).

In today's trading, stock price of most these companies gained between two per cent and 20 per cent.

"Not only valuations for some of these media and entertainment stocks look good, mid-cap funds' active buying is driving their stock price up," said Mr Vinay Goyal, Chief Dealer, Quantum Securities.

He believes that several mid-cap funds are looking at value buying and many of the media and entertainment sector stocks fall in this category.

According to a broker, most of the media companies' valuations are attractive compared to other mid-cap companies. He said none of the media companies has done well this year in terms of stock price, while other mid-cap stocks have moved up substantially. Therefore, there is buying in media stocks now.

A dealer with a domestic broking firm said, "media stocks have not moved much this year, so the possibility of fall from these levels is low, while other mid-cap stocks have had a fast run-up and have become more risky."

Shares of Crest Animation Studios have been on an upward course on strong fundamentals and hopes of a deal likely. The share had gained 25 per cent in the last month to around Rs 95 on Monday. On Tuesday, it jumped up by another 20 per cent to hit the upper circuit at Rs 116 on the BSE.

Crest Animation, which provides animated content to films, television programmes and DVDs, could find opportunities in the gaming industry. International gaming companies have approached the company, but no deals have been fructified so far.

Another analyst pointed out that shares of Crest are expected to do well on the back of its library valuations. "Its balance sheet may not reflect the true value of the company as much as its library," he said.

Hathway Bhawani is another stock that climbed up to 20 per cent upper circuit on Tuesday. The share closed at Rs 19.14 on the BSE.

When contacted, the company officials said Hathway Bhawani's prospects look good post-introduction of digital cable services in key cities such as Mumbai and Delhi. It is poised to roll out its digital cable services in other cities, including Pune and Bangalore.

Analysts believe that the upturn in sectors such as FMCG and consumer durables augurs well for the broadcasters, as these are large media buyers.

Shares of companies such as Crest, Balaji Telefilms, NDTV, Adlabs and Zee Telefilms are seen as lead picks in their respective categories within the media and entertainment sector, an analyst said.

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