Shares in Reliance Group company, TV18 Broadcast has fallen as as much as 43.2% in the last 1-month, leading to severe capital destruction for investors. While there is little doubt that markets too have fallen, the fall in TV 18 Broadcast has been even much sharper. Should you now buy the shares of TV 18 Broadcast after the fall?
Reason for the decline in the stock of TV18 Broadcast
Investors have been selling the shares of TV18 Broadcast after Reliance and Viacom18 announced partnership with Bodhi Tree Systems. The shares of the company have now fallen from 52-week highs of Rs 82.55 to the current market price of Rs 43.
TV 18 Broadcast is the part of the Network 18 Group. The Network 18 Group has the largest bouquet of channels (56 domestic channels and 16 international beams), and a substantial digital presence. 73.15% of the Group is held by Independent Media Trust, of which Reliance Industries is the sole beneficiary (total promoter holding is 75%). Network18 holds 51% of subsidiary TV18. TV18 in turn owns 51% in Viacom18 and 51% in AETN18. The group is the market-leader in multiple genres (Global top 20 in news pay-apps; top 2 in Digital News in India, No 1 Business News channel, top 3 in National News, No 2 premium Hindi GEC, Kids No 1, English No 1).
Solid TV and digital properties
In English News the group owns CNN News 18 and has News 18 in a whole host of regional languages. The group owns Marquee Digital properties (MoneyControl, First Post, BookMyShow) & OTT video (VOOT) provides future-proof growth and content synergy.
According to data for FY 2020-21, Network18 was ranked No 2 by reach (UVs) and No 3 by page views amongst Indian media groups . MoneyControl is at 3rd position in terms of unique visitors and 1st position in terms of pageviews.
Should you buy the stock of TV18 Broadcast?
We are pretty neutral on the stock, but, would recommend buying on the stock of TV18 Broadcast in small quantities. There is absolutely no doubt that the group owns some of the finest news, entertainment and digital properties in the country. Having said that the media industry is one industry, where profits have been hard to come by. For the FY 2021-22, the company reported an EPS of Rs 1.01.
This means the stock is still trading at a price to earnings multiple of 41 times, based on the trailing p/e. Investors, who are willing to take the risk can buy into small quantities, only because the company owns some of the marquee brands in the digital and television space. Also, should there be an economic revival and advertising spends are boosted, we could see a significantly improved performance from the company.
Investing in stocks is risky. Please consult a professional advisor before investing in the stock markets. The author and Greynium Information Technologies Pvt Ltd, would not be responsible for losses incurred. The author and his family do not hold shares in TV18 Broadcast. Markets are exceedingly volatile on account of rising interest rates, hence, investors must exercise due caution before investing.