After a 50% Rally, this Digital Media Stock Falls 18% in Last Two Days. Here's Why...

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  • Mar 8, 2022 - After a 50% Rally, this Digital Media Stock Falls 18% in Last Two Days. Here's Why...

After a 50% Rally, this Digital Media Stock Falls 18% in Last Two Days. Here's Why...

Mar 8, 2022

After a 50% Rally, this Digital Media Stock Falls 18% in Last Two Days. Heres Why

Stock markets across the globe have been in selloff mode due to ongoing Russia-Ukraine war.

Despite the geopolitical turmoil, a few stocks have managed to provide excellent returns to their shareholders.

Among the very few, Quint Digital Media is one such stock that has surged 27% in the last two months. In the last five trading sessions alone, shares of the media firm have gained 21%.

However, due to weak market sentiment, shares of this smallcap media company hit a lower circuit of 10% on the BSE today.

Quint Digital Media is India's only new-age digital media group listed on an Indian stock exchange.

What's driving the rally?

Last week, industrialist Gautam Adani made headlines on announcing his entry into the news business news with Raghav Bahl, the founder of Network18. The Raghav Bahl-led digital business news platform, Quint Digital Media, will now have the Adani Group as an investor.

Digital media group has entered into a binding term sheet agreement with the Adani Group on 1 March 2022. As part of the term sheet, Adani Group will acquire a minority stake in Quintillion Business Media (QBM).

The proposed transaction with the Adani Group is only for QBM, the digital business news platform, and not in relation to other digital media or media tech properties owned by Quint Digital such as The Quint, Quintype Technologies, thenewsminute, and Youthkiawaaz.

The deal is subject to standard due diligence and the execution of definitive documents. As of now, Quint Digital has signed a memorandum of understanding with Adani Properties for the planned sale of a minority stake in QBM controlled by Quintillion Media (material subsidiary).

With this deal, Adani is set to become the second major player in the media industry after Mukesh Ambani-led Network18.

Management's view on the acquisition

According to Sanjay Pugalia, CEO, Adani Media Ventures said the company intends to lead the path for new age media across different platforms.

He further added,

  • The adoption of technology and the increased ability of India to consume information has dramatically transformed the way media is expected to disseminate authentic information.

While the CEO of Quintillion Business Media, Anil Uniyal said,

  • Given the proven execution record of the Adani group, their support to fulfill the ambitions of QBM will lay the foundation for accelerating the growth of the business and scale of QBM's high quality content for the Indian audiences.

India has the world's largest population of young people, which is boosting digital media consumption. The growing demand for on-demand digital news services has been driven by improved 3G and 4G internet coverage and rapidly declining data costs.

In India, online news consumption is booming at the same rate as conventional media consumption. The legacy media businesses are also popular in the online space. This bodes well for the company.

What's the deal with Bloomberg Media and Quintillion Media?

QBM is a business and financial news company and also operates prominent media website - Bloomberg|Quint.

Interestingly, Bloomberg Media and Quint on 1 March 2022 announced the restructuring of their partnership in India. Both the companies have ended their equity joint venture in favor of a new content license agreement.

Bloomberg and Quintillion Media will no longer collaborate on content but will continue to distribute Bloomberg content in India through a license agreement.

Back in April 2016, Quint and Bloomberg had formed a 74:26 joint venture in India and had planned to launch a business news channel and the portal as well.

While the portal was launched in 2017, the company couldn't procure a license to run a TV channel from the ministry of information and broadcasting (MIB).

A close look at the company's financials...

For the December 2022 quarter, the company's net profit rose 516.7% to Rs 11.1 m against Rs 1.8 m during the previous quarter a year ago. It's operational revenue increased by 48.5% to Rs 92.5 m compared to the December 2021 quarter.

Quint Digital had marginal debt of Rs 2 m as on 31 March 2021.

Key Parameters

(Rs m) Dec-21 Dec-20 Mar-21 Mar-20
Net Sales 93 62 211 140
Expenses 52 45 - -
Profit before tax 16 12 -19 -276
Profit after tax 11 2 -19 -275
Net profit margin 12% 2.90% -8.8% -196%
Source: Equitymaster

Who is Raghav Bahl?

Raghav Bahl is an Indian businessman, a serial entrepreneur, and an investor best known for his past ownership of several television channels, including TV18 India.

He was the founder, controlling shareholder & managing director of Network18 group, a media group he started in 1993 and grew into one of the largest collections of media properties in India.

After departing from the Network18 group, Bahl co-founded Quintillion Media Pvt Ltd with his wife Ritu Kapur. This media group controls Thequint.com.

Besides founding and scaling Network 18 and The quint, Mr. Raghav has also seeded moneycontrol.com, bookmyshow.com, firstpost.com, yatra.com, among others.

In October 2018, Bahl's Quintillion Media, in Noida and his Delhi home were raided by income tax officials. The Enforcement Directorate (ED) had filed a money laundering case against the media baron in 2019 for alleged laundering of funds to purchase an undisclosed foreign asset.

However, in December 2021, the Supreme Court granted interim protection to media entrepreneur in connection with a money laundering case.

How the stock of Quint Digital Media has performed on the bourses...

Shares of Quint Digital Media opened the day at Rs 505.1 on the BSE.

Its share price closed at Rs 480.3 (down 10%) on the BSE.

At its current price, it is trading at a P/E of 271.94.

The share touched its 52-week high of Rs 638 and 52-week low of Rs 281 on 4 March 2022 and 5 March 2021, respectively.

Over the last 30 days, the Quint Digital Media share price is up 15.1%. Over the last one year, the company's share price is up 62.8%.

chart

About Quint Digital Media

Quint Digital Media (formerly known as Gaurav Mectantiles) operates as a digital media company. Gaurav Mectantiles was earlier engaged in ship breaking, trading, and investment.

Now, the Quint offers news through platforms in various categories such as politics, businesses, opinions, entertainment matters, sports, technology, women's matters, health and fitness, blogs, hot wires, photos, videos, and international news.

Quint Digital Media serves customers in India.

For more details about the company, you can have a look at Quint Digital Media's factsheet and quarterly results on our website.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

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