The new media hype: Will it sustain? - Views on News from Equitymaster

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The new media hype: Will it sustain?

Dec 4, 2000

The new media stocks viz. Balaji Telefilms and Tips Industries, which have recently been listed on the stock exchange, are currently amongst the most active stocks in the market. Infact, amongst the B-2 group of the BSE, they have turned in amongst the highest turnovers. We take a look at both the companies.

CompanyBalaji TeleTips Industries
Turnover 341,690 175,237
Equity (no of shares) 10,300,000 12,000,000
Promoter's holding67.9%75.0%
Free Float 3,304,240 3,000,000

Balaji Telefilms, the television software company, floated by film star Jeetendra, produces television software for all the major channels, which includes Doordarshan, Zee TV, Sony TV, Star TV, Sun TV, Gemini TV and Udaya TV. It is providing 30 hours of television software per week. Some of the popular serials being aired include ‘Hum Paanch’, ‘Ghar Ek Mandir’, ‘Bandhan’, catering to the Hindi speaking audience and 'Pavitra Bandham', ‘Kulaa Villaakku’, in regional languages.

On the day the company got listed, the company announced a merger with Kerry Packer’s Nine Network. Interestingly, the deal was done by Triumph International (a Ketan Parekh company), who were also one of the lead managers to the issue (the other being JM Morgan Stanley). Ironically, the issue was over subscribed only 1.06 times and all the allotments made were firm allotments. The lead manager holds almost 4% of the company’s equity and it is quite possible that we might see distribution at the current levels. The stock quotes at Rs 253, which implies an earnings multiple of 33 times its FY01 (E) earnings.

Tips Industries is engaged in the business of manufacturing and marketing of pre-recorded audiocassettes, blank cassettes and replicated compact discs (CDs). It has an overall collection of over 8,000 albums and 50% of its turnover is derived from catalogue sales. Off late, it has been very aggressive in bagging music rights of big banner Hindi movies at relatively higher prices. This strategy seems to be paying off for the company as both its recent offerings viz. ‘Taal’ and ‘Dhadkan’ are big hits. The current stock price of Rs 363, implies an earning multiple of over 12 times its FY01 earnings.

With BSE imposing margins of 25% on both these counters on Friday, it is quite likely that both these stocks, which have gone up substantially over the last week, could take a breather. Interestingly, the increased activity in both these stocks has come at a time when all the other media stocks such as Sri Adhikari, Gramophone, Cinevista and TV 18 haven’t seen much action over the past one week. Whether the interest of the momentum players is sustained in these counters beyond this week remains to be seen. Retail investors, might as well keep away from these counters at current levels.

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