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Adith Charlie

`FII interest, rising advertising rates behind enthusiasm'

Mumbai June 5 Media stocks seem to be the flavour of the season. Global investors' increasing interest in India's media and entertainment sector coupled with rising advertising rates have ensured that share prices of these companies touch astronomical heights on the bourses.

In recent weeks, shares of UTV Software and Balaji Telefilms have touched a new 52-week high at Rs 585.70 and Rs 263 per share respectively, while other media companies have also been on the upswing.

Analysts say that increasing interest rates and rising rupee that have impacted sectors such as automobiles, manufacturing and IT, have ensured that attention is now turned to interest insensitive sectors. "Media companies investing into television, radio and multiplexes are the only ones that don't seem to be impacted in these volatile situations," said Mr Hitesh Agrawal, Senior Analyst, Angel Broking.

FII interest

Market men also believe that the sector is witnessing greater interest by foreign institutional investors (FIIs) due to the increase in advertising revenues. "Advertising revenues have been picking up year-on-year in both print and electronic media. They have swollen by 20-25 per cent in the last year alone," said Mr Ankit Kedia, Media Analyst, ICICI Securities.

Indian films have been done well both in India and abroad in the last few months. This has ensured greater hall occupancy for multiplexes, said another analyst.

"Buying interest in media stocks is expected to continue as television industry is expected to grow by 22-23 per cent and print industry by 13-14 per cent in the next two years," added Mr Kedia. Another positive trigger is that most media companies' profits have more than doubled in the fourth quarter of the financial year 2007, said an analyst who did not wish to be named.

Most media stocks have been up on a month-on-month basis. UTV Software Communication gained 70.68 per cent to Rs 530.8, while Cinevistaas was up 52.4 per cent at Rs 53.8, Balaji Telefilms 26.54 per cent at Rs 209.3 and Television Eighteen India 17.6 per cent at Rs 831.6.

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