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Media stocks: A blurred vision?

Jun 16, 2000

Just six months ago, media stocks were the hottest among the stocks in the so called ICE sector. They however seem to have lost their sheen recently. All the three stocks have lost around 70% from the prices at which they were at which they were quoting just four months ago.

 Share Price (Rs) 
Company Name22-Feb15-Jun % Change
Zee 1,544.1 477.7 -69.1%
TV 18 2,267.9 576.8 -74.6%
Sri Adhikari 2,050.0 567.0 -72.3%
Crest 1,256.7 361.7 -71.2%

While the biggest among them Zee was supposed to have been hit by Reliance’s foray into infocom, the reasons are far more earthly. The Alliance Fund is supposed to have offloaded 1.3 mn shares over the last four trading sessions. But this has only happened during the last week.

The prices of all the three stocks have consistently fallen from after February 22nd onwards. Ironically, three of the four companies have raised money via private placements just before their stocks were hammered. While TV 18 made an IPO at Rs 180, Zee made a private placement to Goldman Sachs (at a price of Rs 1000 per share) Sri Adhikari made a placement at Rs 1,800 and Crest made two private placements during the year (which raised the equity to Rs 95.5 m).

Is it that the fund managers have suddenly realised that the stocks were overvalued? Or is it that they’ve disposed off the earlier holdings at market peaks and substituted them with the shares they’ve got during the placements?

Whatever the reason, it’s a poor consolation for those retail investors who would have been left holding the can. After all, it doesn’t take long for ICE to melt into water! Does it?

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