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Top Media Stocks in India

Best Media Stocks in India

The media industry in India is on the cusp of a strong phase of growth, backed by rising consumer demand and improving advertising revenue.

It is expected to grow to US$ 55-70 bn by 2030 at 10-12% CAGR, led by over-the-top (OTT), gaming, animation and visual effects (VFX).

Rising income and evolving lifestyles have led to a higher demand for services in the media and entertainment sector.

Higher rural penetration and a rapidly growing young population coupled with increased usage of 3G, 4G and portable devices have also augmented demand.

The Government of India (GoI) has supported the industry’s growth by taking various initiatives such as the digitization of cable distribution and ease of institutional finance to improve profitability for the sector.

Porter’s Five Forces Analysis of the Media Sector in India

Porter's Five Forces is a model that identifies and analyzes five competitive forces that shape every industry.

These are barriers to entry, bargaining power of suppliers, bargaining power of customers, threat of substitutes and competition within the industry.

A change in any of the forces normally requires a company to re-assess the marketplace.

Let us have a look at how these five forces shape the media sector -

#1 Barriers to Entry

The most attractive segment is one in which barriers to entry are high as they restrict the threat of new entrants.

Conversely if the barriers are low, the risk of new companies venturing into a given market is high.

In the media sector, barriers to entry are high, for broadcasting since it is very capital-intensive. They are low for content providers.

#2 Bargaining Power of Suppliers

The bargaining power of customers is the ability of suppliers to put the firm under pressure. Suppliers may refuse to work with the firm or charge excessively high prices for unique resources.

This is low in the media industry, as the number of suppliers is high. There is an increasing number of content providers.

#3 Bargaining Power of Customers

The bargaining power of customers is the ability of customers to put the firm under pressure. It is high if buyers have many alternatives and low if they have few choices.

In the media sector, the bargaining power of customers is high, as a variety of entertainment sources are available.

#4 Competition

For most industries, having an understanding of the competition is vital to successfully marketing a product.

The competition in the media industry is high, especially in Hindi dailies and regional print media too. Competition is also high amongst broadcasters especially for general entertainment channels.

#5 Threat of Substitutes

A substitute product uses a different technology to try to solve the same economic need.

This is high for the media sector, as the internet as well as significant cultural events/sporting events pose a significant threat to existing forms of media and entertainment.

Porters Five Forces Analysis of the Media Sector in India

Source: Equitymaster

When to Invest in Media Stocks

The media sector has provided investors healthy returns in certain time periods during the past decade but overall, the performance of the sector has been underwhelming.

The best time to buy stocks from this sector is when companies that have strong fundamentals are trading at attractive valuations.

You can also track the consumer spending as the media sector gets bolstered by declining unemployment rates and rising disposable income levels.

To know more about the sector's past and ongoing performance, have a look at the performance of the NIFTY Media Index.

Key Points to Keep in Mind While Investing in Media Stocks

Here are some key points to take note of before you invest in media stocks.

#1 Profitability of the company

Profitability is the primary goal of all business ventures. Without profitability the business will not survive in the long run. So measuring current and past profitability and projecting future profitability is very important.

Make sure to pick companies that have witnessed a consistent growth in revenue and profit.

Here’s a list of top media companies in India based on their consolidated net profit.

Company Name Net Profit (in Rs m) Net Profit Margin (%)
Sun TV Network Ltd. 15,317 48.2
TV18 Broadcast Ltd. 6,860 13.1
Deccan Chronicle Holdings Ltd. 2,311 22.3
GTPL Hathway Ltd. 2,192 9.1
TV Today Network Ltd. 1,815 19.5
Saregama India Ltd. 1,526 26.3
MPS Ltd. 871 19.4
Source: Equitymaster
Data as of March 2022

#2 Advertising as a % of revenues

Advertising revenue is the income a company earns from displaying paid advertisements on their websites, social media channels, or other platforms surrounding their internet-based content.

Look for companies where ad revenues form a large part of the total revenue.

#3 Debt to equity (D/E) ratio

A company uses both equity and debt to run a business. However, the amount of debt it uses indicates its fixed obligations. Higher the leverage, higher will be the fixed charges such as interest expense which will lower the profitability.

One must look for a debt to equity ratio of one or less than one.

Here’s a list of top media companies in India with no debt or a very low debt to equity ratio.

Company Name Debt to Equity Ratio
Sun TV Network Ltd. 0
TV Today Network Ltd. 0
Saregama India Ltd. 0
MPS Ltd. 0
Hathway Bhawani Cabletel & Datacom Ltd. 0
Midvalley Entertainment Ltd. 0.02
GTPL Hathway Ltd. 0.11
Source: Equitymaster
Data as of March 2022

#4 Return on Capital Employed (ROCE) ratio

Along with a low debt to equity ratio, a one must look for a high return on capital employed (ROCE).

Return on capital employed measures how much profits the company is generating through its capital. The higher the ratio, the better.

An ROCE of above 15% is considered decent for companies that are in an expansionary phase.

Here’s a list of top media companies in India with more than 15% in ROCE.

Company Name ROCE(%)
Hathway Bhawani Cabletel & Datacom Ltd. 82.8
New Delhi Television Ltd. 54.6
Bodhi Tree Multimedia Ltd. 47.8
Aventez Media & Technologies Ltd. 40.4
CDI International Ltd. 33.9
MPS Ltd. 31.9
Sun TV Network Ltd. 30.9
GTPL Hathway Ltd. 27.9
Saregama India Ltd. 25.1
Midvalley Entertainment Ltd. 23.4
TV Today Network Ltd. 22.9
Deccan Chronicle Holdings Ltd. 21.2
Zee Media Corporation Ltd. 19.7
Source: Equitymaster
Data as of March 2022

#5 Valuations

Two commonly used financial ratios used in the valuation of media stocks are -

Price to Earnings Ratio (P/E) - It compares the company’s stock price with its earnings per share. The higher the P/E ratio, the more expensive the stock.

To find stocks with favorable P/E Ratios, check out our list of stocks according to their P/E Ratios.

Price to Book Value Ratio (P/BV) - It compares a firm's market capitalization to its book value. A high P/BV indicates markets believe the company's assets to be undervalued and vice versa.

To find stocks with favorable P/BV Ratios, check out our list of stocks according to their P/BV Ratios.

#6 Dividend yields

There is no consistent trend of dividends across the industry, with different companies having different dividend policies.

For more details, check out our list of top media stocks offering high dividend yields.

Top Media Stocks in India

The top media stocks in India can immensely benefit with so many factors positively affecting the industry.

Here are the top media stocks in India which score well on crucial parameters.

#1 Sun TV

#2 MPS

#3 Saregama

List of Media Stocks in India

The details of listed media companies can be found on the NSE and BSE website. However, the overload of financial information on these websites can be overwhelming.

For a more direct and concise view of this information, you can check out our list of media stocks.

You can also read our media sector report and check the latest media sector results.

Best Sources for Information on the Media Sector

Ministry of Information and Broadcasting -

Indian Brand Equity Foundation Media Sector Report -

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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