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Archive for the ‘Media and entertainment’ Category

Just Dial now 3rd most valuable media co, moves up a rank

Posted by fairval on December 10, 2013

Came across a broker report with a target price of (hold your breath) Rs 1500 for Just Dial. To put this in context, in May’13 when the IPO came, the offer price was Rs 530, and it wasn’t a cheap IPO at over 50x trailing PE. However, the prevailing view at that time, correctly, was that it was worth a Buy at that price. Just Dial now quotes at a PE of 120x FY13 and over 75x FY14 expected eps.

This blog had in a post on 25 June pointed out how Just Dial was the 4th most valuable media co. Well now, it is the 3rd. In June, it was less than 30% of Sun’s market cap, now the gap is less than half. The brokers’ target price will take Just Dial’s M cap to Rs 10,000 crore, or just 32% less than Sun TV. Sun, btw, makes more net profit than Just Dial’s revenue.

While most other media rankings are unchanged, the other big mover is Info Edge, which has gained over 40%, and is now the 5th most valuable stock, ahead of DB Corp, Jagran, Just Dial has just launched a transaction service, which facilitates order completion, it seems this is a direct competition to Info Edge’s subsidiary Zomato. Interesting times ahead!

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Just Dial is now the 4th most valuable media stock in India

Posted by fairval on June 25, 2013

Just Dial seems to have done well since listing. Having gained over 15% from the IPO price, it is now ranked 4 amongst Indian media stocks. This makes it more valuable than all listed print stocks, radio stocks, and behind only 3 stocks – 2 TV broadcasters cum distributors, and one pure TV distributor (DTH co).

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It also seems to have decisively left behind Info Edge, the other classified advertising company, which is still struggling to grow beyond recruitments.

Just Dial is tho now perhaps the most expensive stock on Indian stock markets, quoting at over 60x trailing. It needs to grow earnings at >50% CAGR for shareholders to make returns from these price levels.

Posted in IPO, Media and entertainment, Valuation | Tagged: , , , | Leave a Comment »

Explosive Times Response letter!

Posted by fairval on November 7, 2012

Somebody just forwarded this ‘open’ letter, purported written by someone in the sales arm of The Times of India group (Times Response) to the new President-sales, Aranabh.

Here’s the full thing:

Wow! its explosive. Of course, it need not have been written by anyone within, could be something written by someone outside. Also, the language is too polished. I worked in that place, doubt any response guy can write this well. Or someone from edit has helped write this.

But yes, the resentment part is true. Not just against Arunabh, there have been, it seems other questionable appointments. And, it seems, while yield is up, absolute revenues are down ytd. This is unheard of. As the letter says, this hasnt happned for alteast as long as anyone can remember.

Absolute number and market share are for more important than yield. Chasing yield at the expense of market share does not make sense, and Resp teams are clearly unhappy about it. Very hard to get volumes back, once lost.

Clearly, the owners are carrying out some experiment, which perhaps only the VC (Sameer Jain) truly understands. He’s a visionary, lesser mortals like us will figure out once it has played out a bit more. It does seem like the owners want large scale churn in Response.

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Deccan Chr..IFCI files suit, alleges ‘thousands of crores’ of loans, ICICI sanctioned loan on June 18

Posted by fairval on July 30, 2012

IFCI it appears has filed a winding up suit last Friday. From a newsreport…Don’t know why IFCI is alleging ‘thousands of crores’ of loans

Deccan Chronicle Holdings Limited (DCHL) has liabilities running into thousands of crores of rupees that may lead to the erosion of the entire net worth of the company and make it commercially unviable and insolvent, Industrial Finance Corporation of India Ltd (IFCI) has said in the winding-up petition which it has filed in the high court against the Hyderabad-based company.

The petition was filed by IFCI on Friday after DCHL defaulted on redemption of 250 unsecured redeemable non-convertible debentures (NCDs) on June 26 this year and failed to pay up its dues of Rs 27,80,47,945 despite “repeated requests and demands”.

IFCI said DCHL had massive secured and unsecured debts running into thousands of crores of rupees with various banks, financial institutions, non-banking finance institutions etc. and feared that many more winding up petitions may be filed by other creditors as the company had defaulted on several liabilities.

Also,

ICICI Bank it seems sanctioned a Term Loan of Rs 350 crore on June 18th! Deccan may not have been able to draw down, otherwise, it could have paid the likes of IFCI.

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Deccan Chronicle mess: Satyam all over again

Posted by fairval on July 27, 2012

Just how exactly does a net cash positive company default? It came to light a few days ago that Deccan Chronicle had defaulted. The events have seemed to gather speed over the last 2 days. On Thursday, the company announced its MD had quit. The stock was down almost 20% today. In July, it has lost over 50%.

Till July’12, Deccan had a long term debt rating of AA from CARE. On July 2, CARE issued a release saying Deccan had missed a payment on an NCD.

If you see its last declared balance sheet (Sep’11), it has a debt of Rs 298 crore, and cash and bank balance of Rs 398 crore. In other words, its net debt is zero and it had a cash balance on the top of it. Even CARE’s statement says: As per the company’s submission, it had outstanding cash balance/ FD amounted to Rs.372 crore as on December 31, 2011 and gross cash accruals for the last quarter (1st January to 31st March 2012) of FY12 amounted to Rs.20 crore. Despite aforementioned liquidity, the company has defaulted on its debt obligations. The company has not offered any explanation regarding the same.

So why did it default?

The most like explanation is the numbers are fudged. And it is not that this was not known.

The auditor seems to be some local entity called C B Mouli & Associates, so not a Big 4 / 5. And the rating agency was CARE. Both did not seem to know.

But did anyone know about the fudge? Some did. As early as 2009 or so, a friend of mine who is the equities head of an MNC broker, had called me check his hypothesis on Deccan. He said his analysis showed Deccan was overstating sales of its new editions, for ex, the one in Chennai. He sought my help to check this (I was in Times group at the time). I did an internal check, and I got the same feedback – Deccan was fudging numbers. The sales numbers they were claiming for some editions were simply not possible.

With all this, it seems many others, including CARE, didn’t catch it. This appears to be a case like Satyam.

Posted in Corporate Governance, Media and entertainment, What was that Again? | 1 Comment »

Merchant Banker Creativity in Hindustan Media IPO

Posted by fairval on July 10, 2010

Merchant Banker Creativity

We all know merchant bankers, like any other broker, don’t have any rights and obligations towards the buyer. Their sole focus is – first, maximising their own benefit, and second, maximising benefit for the seller. Nothing wrong with that, but in IPOs, the regulator SEBI needs to keep its eyes open a little more.

The IPO document in Hindustan Media issue is an exercise in creative presentation of data.  The most important, and obvious table of data, which should have been in the IPO document does not exist. Instead, what is there is the above table. Edel and Kotal are the bankers, clearly two outfits without a backbone.

HMV (Hind Med Ventures) operates solely in regional media. Just what is the share of of regional media in total India advertising? You can go thru the entire document and u wudnt find the answer to this question. Instead what u have is the above table trying to give a positive spin to the small role of regional media in advertising.

Go thru the prospectus, and u realise the HMV issue is just an exercise to raise money. It changes nothing in the way HT Media as a group will operate. Distribution and advertising sales will still be centralised with HT Media. Distribution maybe is ok, but advertising? If it is still centralised, then just what is being achieved by having a separate listed entity? U might as well have raised money in HT Media. Of course, maybe the promoters dont want to dilute their stake too much in the parent.

Posted in Markets, Media and entertainment, What was that Again? | Leave a Comment »

Media Trivia – New FDI norms

Posted by fairval on July 4, 2010

Media FDI Norms (source: UBS)

Now that ADAG group is in hyperdrive on M&As/JVs, would it take in equity for Big TV? ADAG has just acquired Digicable, supposedly india’s largest MSO. Dish TV has been moving up lately, brokers are all positive on the stock.

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India’s top media companies

Posted by fairval on November 12, 2009

Some not easy to see data, from a business paper (Mint, i think). Zee has covered a lot of ground since FY04. For all the criticism Subhash Chandra gets, he seems to be the only guy making money from television. Star has stagnated. While this table does not have profitability numbers, it is believed Star is losing money for the last 2-3 years. No one else anyway makes money from TV

India's top media cos

Posted in Data, Media and entertainment | Leave a Comment »

Mittal’s media plans

Posted by fairval on November 20, 2007

or why media, after telecom/insurance/retail/agriservices…

Sunil Mittal now wants to enter the media business. Having created almost $50bn of investor wealth in telecom business, Mittal has already announced forays in insurance, retail and agri processing. These new forays are in his personal capacity, his flagship Bharti Telecom has nothing to do with these new forays.

Mittal’s retail plans are understandable. Every Indian businessman wants to enter retail. After all, world’s largest company Walmart is a retailer. And with a billion plus population, you can build scale in retail.
But why media? This is a business which hasn’t really caught mainstream fancy – either of investors, or of India’s business houses.

India’s ad market is currently around Rs 30,000 crore ($7.5bn), and is projected to grow to Rs 100,000 crore ($25bn) by 2012. In contrast organized retail is perhaps $15bn at this point, and is projected to grow to maybe $100-200bn or so by 2012 (5-10% of GDP, all kinds of figures are floating around within this range). So actually organized retail may pull away going ahead, since a lot of investment is pouring into retail. Infact, retail is much more of a nascent business in India than media. Media has been around, and in terms of print and television, it is already quite fragmented (though not necessarily well penetrated).

Now lets look at wealth creation. Here, media has created more value, perhaps since it has been around longer. Cumulative value of listed companies is around $15bn, while for retail it is around $4bn. If we add a few large unlisted companies in media, value of industry goes to $39bn, as shown here. In retail, most companies are currently unlisted. Reliance’s retail business is valued at upto Rs 30,000 crore by analysts at this point (which is rather ridiculous, neither sales or investment justifies this).

Another way to look at this is to ascribe a sales multiple to the industry as a while. Media companies are currently quoting at 5-10x sales. It we take 7.5x sales for industry, then for FY07, we get a value of $50-60 for the industry as a whole for FY07. For FY12, if we take a sales multiple of 7.5x, we get a value of $190bn for media industry in 2012.
In retail, companies are valued at 1-2x sales. If we take 1.5x, then FY07 value was perhaps $22bn. Going ahead, in FY12, if we take 1.5x sales, then retail industry could be $225-300bn by 2012.

Now lets see a new entrant in both retail and media, with the aim of getting 10% share by 2012. In media, this co could get an M cap of $18bn or so by 2012, and in retail, it could get $22-30n. Both are substantial values.

At this point, it is perhaps easier entering retail than media, but then again, with capacity to invest, who knows what can be achieved. Buy out a large media house, and you get a running start, not too far from what Mittal has created in telecom as of now.

People have entered media in the past for reasons other than wealth creation. Hopefully Mittal hasnt fallen prey to such instincts.

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