NDTV Ltd: Buy
CMP: Rs.227.25
Adani Group's price: Rs.342.65
Face Value: Rs.4
Market Cap: Rs.1466 Cr
TTM EPS: Rs.7.56
This is Adani Group's strategy to gain a greater footprint in India's media sector as a part of its broader diversification binge to grow its empire beyond coal mining and ports into airports, data centres, cement, and digital services.
The CMP of Rs.227.25 is much below what Adani group paid as open offer. Moreover, post acquisition, the Board of Directors of New Delhi Television Limited on a meeting held on May 17, 2023 granted approval for a proposal to request the Ministry of Information & Broadcasting for permission to launch 9 (nine) news channels in various Indian languages.
According to certain media reports, Gautam Adani has expressed his delight in assisting NDTV by providing top-tier talent and facilities, with the goal of developing it into a successful worldwide news organisation across multiple platforms.
The Media and Entertainment Sector (M&E Sector) usually outperforms the GDP. Now that interest rate cycle has probably peaked out, we can again see a massive GDP growth going forward.
Meanwhile, th advertising revenue was from e-commerce and education sectors, will continue to be money spinners for the media sector, especially for Digital domain, as Indian economy takes off with the advent of festival season.
However, the Business for the current financial year will depend on how the economy recovers, but advertising is expected to iccrease for the festival season and due to Lok Sabha elections due next year.
NDTV is already leveraging its huge leadership position in the online space to expand and grow its business.
NDTV Convergence Limited (“Convergence”) recorded its highest-ever revenue in 2020-21 and its highest-ever PAT of Rs. 27.91 crore and an EBITDA of 27.43%.
Google has partnered with Convergence as a premium publisher to launch its new content format in India,“ Webstories”. Convergence, on account of the credibility and popularity of its content, was also chosen to bea n early partner of the Google Convergence also received support from the Google Journalism Emergency Relief Fund.
On social media, NDTV’s following remains premium. NDTV is the most-popular news handle on Twitter with 17.70 million followers in India on 2nd July, 2023. The number of subscribers continue to soar for the NDTV YouTube channel and so is NDTV India. In Instagram too it is one of the most followed English news account.
Targeting a new younger demographic, Convergence has signed up as the preferred content partner for new platforms like Snap and Glance, which are phone-based.
NDTV videos across online platforms is also growing by leaps and bounds, shattering all previous records.
NDTV Food remains the country’s top online destination in its genre. It is the largest repository of 6000+ recipes from top chefs, restaurants, and home cooks. It is also popular for its restaurant reviews, home remedies and expert tips through articles and videos.
Some Useful Highlights:
1. NDTV 24x7 remains the most widely-distributed Indian News channel outside India.
2. Last year, NDTV launched its channels in Nepal and Bangladesh.
3. NDTV 24x7 is the only Indian English news channel available in the US on Comcast Cable, the world’s largest cable network, Virgin Media in the UK and Multichoice DStv in South Africa.
(e) The Company and its subsidiary NDTV Convergence Limited (“NCL”) have incubated e-commerce verticals to unlock the shareholders’ value and accelerate the Company’s leadership position on internet using transaction based model.
As a part of incubation of new ecommerce businesses as promoter of these companies, the Company and NCL, had agreed to provide patronage through marketing and promotional support for 3 years including but not limited to advertising on NDTV channels, both domestic and international, bands on NDTV channels only out of unsold inventory, anchor mentions, programme names, night time programming, promotional product launches, access to the homepage, redirection of visitors/traffic from the website of NCL to the website of the ecommerce verticals on no charge, best effort basis.
The Company & NCL would not be incurring any incremental costs as a result of providing such services but will accommodate and support these new companies by contribution of residuary resources in a gratuitous manner. This is in expectation of future benefits that are expected to flow to all shareholders of the Company and NCL.
Sector news: The media sector has been growing tremendously since the last few years and this is the reason, this sector has become one of the highest-income grossing sector in India.
Epecially after the COVID-19 outbreak, the media industry has seen rapid growth, when people were forced to sit at their homes, and spent their times watching Netflix and Amazon Prime.
As per a forecast, the Indian media and entertainment industry will reach ₹2.4 lakh crores by 2024, resulting in the growing sales of Smart TVs, digital segments, film segments and animation & VFX segments.
The Indian media and entertainment sector is seemingly on an upward trajectory. According to a FICCI-EY Report in 2021: While print media witnessed a resurgence, the Television sector maintained its position as the largest segment in Indian media and entertainment with digital media following in second place.
In terms of advertising, digital media is contributing the highest share of advertising in India.
According to another estimate, the media and entertainment sector is set to grow Rs..734 billion to reach Rs.2.83 trillion by 2025 at a compound annual growth rate (CAGR) of 10.5%.
The contributors to the growth of the media and entertainment segment are believed to be digital, online, gaming, and television which will account for an estimated 65% followed by animation and VFX at 11%, live events, and films at 8% each.
According to the report, the Indian advertising industry grew at 18.1% over 2021 and is expected to witness a compounded growth of 15.07% by the end of 2024.
Digital advertising in India continued to be at the tip of the iceberg with a substantial spike of 39.5% over 2021, putting TV advertising in a tight spot, the report said.
The report also states that the Indian digital advertising industry stood at a market size of Rs.29,784 crore, growing at 39.5% over 2021, and is predicted to reach Rs.51,110 crore, with a compounded growth rate of 31%, by 2024.
Talking about the increasing digital appetite, the report mentions that digital media is expected to overtake the ad spends share of television in 2023, putting TV advertising in a tight spot. Digital media spends is driven by social media with a contribution of 30%, followed by 28% from online video and 23% from paid search, highlights the report.
The report further shed light on some interesting numbers:
➡️The spend on online video is expected to grow rapidly and be at par with social media spends by 2024.
➡️The FMCG sector contributes 30% of total advertising spends, followed by the e-commerce category at 18%. Hence, the fortune of FMCG sector is related to Indian Media space.
➡️FMCG and e-commerce are the largest contributors to the digital media industry, accounting for 38% and 20%, respectively, followed by consumer durables, pharmaceuticals, and automotive.
Due to the rapid adoption of the next generation of Web3 technologies and the development of mass markets, Indian consumers’ expectations are set to evolve toward convenience, commerce, experiential media, and marketing in the new digital economy.
The evolution of the new digital economy will lead media sector.
Conclusion: Looking at the above points and considering the stake sell by the promoters of NDTV Ltd at Rs.342.65 against the CMP of Rs.227.25, the stock appears to be a good bet for the short to medium term.
Prudent investors can buy the scrip of NDTV Ltd near the CMP for targets of Rs.400/450 in the coming days. SL: Rs.295.
Bibliography:
š„The Financial Express.
š„ Wikipedia.
š„ The Business Standard
š„The Economic Times.
š„CNBC TV18.
š„Moneycontrol.com
š„Daily Mint.
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