Mid–day: Should one apply? - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Mid–day: Should one apply?

Feb 12, 2001

Mumbai’s best known and top selling tabloid Mid–day’s initial public offering opens for subscription today. Should one subscribe for the issue? We take a look at the pros and cons. The pros are quite clear. For one the company’s flagship product is second only to ‘The Times of India’ in terms of circulation in Mumbai. While Times’ circulation is over 600,000 copies, Mid–Day sells approx. 435,000 copies. (The figures are inclusive of Sunday Mid–Day’s circulation figures of 160,000 copies daily.) It claims a readership of almost 5.9 readers for every copy as compared to ‘The Times’ 2.7 readers per copy. The advertisement rates for Mid–Day are still only around a fifth that of ‘The Times’ despite a 22% hike that Mid–Day effected in August 2000. Over the last decade, it is Mid–day which has gained the entire increase in the market share of the afternoon dailies. It currently has a market share of 87% among the afternoon dailies and 28% among all English dailies (including financial dailies).

There are basically three concerns: first, the fact that Mid–day’s biggest competitor ‘The Times of India’ is reportedly taking over its erstwhile competitor ‘The Afternoon Dispatch and Courier.’ While the Afternoon currently controls around 13% of the market share among afternoon dailies, the fact is that ‘’The Times’ marketing machine could very well cross sell ad spots and infact offer a package deal to its advertisers comprising its morning daily and its afternoon tabloid. It is the company’s publishing business, which at present is subsiding its other businesses viz. outdoor, internet and radio and a threat to this business would hurt Mid–day Multimedia.

The management however says that it has a put in place a strategy to face competition though it refused to talk about it.

The second concern pertains to Midday’s radio venture. The license fees that Mid–day has had to commit to the Mumbai, Delhi and Chennai licenses alone amounts is Rs 205 m (the company’s fees would have to be paid when the broadcasting starts). Compare that to the fact that the company’s profits for the first nine months of the current year amounts to Rs 74.3 m and the risk is obvious. Has the company bitten of more than it can chew?

The management however, disagrees. It believes that for a company such as Mid–day not being in the radio business would be suicidal. The main attraction for the advertisers is the relatively lower advertisement rates (anywhere between Rs 400 to Rs 500 per ten seconds) vis-ŕ-vis television. And these rates will open up a huge market for even smaller local advertisers, which Mid–day wants to tap. Even for the bigger advertisers, despite the fact that television has a wider reach, radio reaches a much more focused audience, which is also what the advertisers would look for. The management is also hopeful that the government would re–look at the license fees issue a lot more favourably.

The fact remains that apart from the bid amount which companies pay as license fees for the first year, they will have to pay 15% more every year from the second year onwards. This does not include the cost of base stations, towers and other transmission infrastructure apart from the cost of programming. (The company however already has a studio in place since they were a part of All India Radio’s FM broadcasters earlier.)

The third concern pertains to the company’s plan for starting a Marathi newspaper on the lines of Gujarati Mid–day. The concern here is that the product faces a strong competitor in ‘Loksatta’ from the Express stable. Though ‘Loksatta’ is a morning newspaper, one is doubtful about whether the target market would be as receptive to the type of content that Midday offers. (The Gujarati Mid–day is slated to break even next year.)

Rs.Sandesh Mid–day Tribune
Market Price 118701,814
52–week high498NA2,173
52–week low110NA1,302
FY01 (E) EPS36.843.6732.73
PE 3.2118.955.4
Market Cap8961,89011,732
M cap/sales0.772.322.39
Market Cap is in Rs m
The Tribune figures have been converted into
Indian currency at an exchange rate of $1 = Rs 46.75
The Tribune figures are for the year ending December 2000.

And finally a word on the minimum offer price: Rs 70 per share. The market capitalisation of the company works out to almost Rs 1.90 bn, which is more than double that of the only listed newspaper ‘Sandesh’ at Rs 900 m. We have compared the valuations of Mid–day with those of ‘Sandesh’ and an international newspaper ‘The Tribune’. Mid–day doesn’t seem to be dramatically undervalued. However, considering the strength of the brand and the management team that the company has, the stock could give decent returns on listing.

Equitymaster requests your view! Post a comment on "Mid–day: Should one apply?". Click here!


More Views on News

What Fuelled the Sudden Surge in PVR and Inox Shares Today (Views On News)

Sep 27, 2021

Shares of both multiplex chain operators surged almost 18% to hit their 52-week highs.

8 Penny Stocks with Exceptionally High Promoter Holding (Views On News)

Sep 25, 2021

While high promoter holding is a good thing, there can be rare cases where penny stock promoters use misleading information about the actual valuation.

Shareholder Activism Triggers a 30% Rally in Zee Entertainment Shares (Views On News)

Sep 14, 2021

Zee Entertainment shares zoom after top investors seek CEO and MD Punit Goenka's removal.

Here's Why Affle India Hit 5% Upper Circuit Today (Views On News)

Jul 2, 2021

In the past one year, the company's share price is up 202%. Can it go higher?

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

Don't Sell these Stocks if the Market Falls (Profit Hunter)

Nov 17, 2021

These are the 3 types of stocks that you should not sell in a market crash.

How to Find Your Next 10-Bagger in this Market (Profit Hunter)

Nov 19, 2021

The #1 make or break factor in your portfolio you shouldn't ignore.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Nov 30, 2021 (Close)