As NDTV shares soar after Adani’s bid, here’s how stock markets value news companies

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New Delhi: Since Adani Group’s hostile bid to acquire news media company New Delhi Television (NDTV) sent the latter’s share price soaring, some interesting facts about how stock markets value Indian news media companies have been revealed.

At the current market price (Monday) of Rs 545.75 per share on the National Stock Exchange (NSE), NDTV’s market capitalization at Rs 3,518.52 crore is more than six times that of the Hindustan Times (Rs 502, 74 crore), which is among the oldest in the country. and leading media houses with market dominance in significant geographies.

It is also believed to be twice as valuable as the TV Today network (Rs 1,855.69 crore) with its formidable vertical media bouquet, including Aaj Tak and India Today TV (English), and almost three times the value of Zee, owned by Subhash Chandra. Media (Rs 1,188.31 crores).

Additionally, NDTV is now valued at more than 1.5 times the two major listed Hindi publishing groups, Dainik Bhaskar and Jagran. Both groups own one of the most widely circulated newspapers in the world and two broadsheets, as well as widely read digital editions.

The only two listed media companies worth more than NDTV are Ambani-owned TV 18 Broadcast (Rs 7,620.33 crore) and Network 18 (Rs 7,888.76 crore).

Chart: Soham Sen | The footprint

While NDTV’s hockey stick rise (a rapid increase after a period of relative stability) from Rs 300 per share on August 12 to Rs 545.75 on September 5 over 15 trading sessions was triggered by the public offering buy, its shares had already risen sharply over the past year with the price being Rs 77 on September 2, 2021.

Chart: Soham Sen |  The footprint
Chart: Soham Sen | The footprint

This means that an investor holding the shares of the company made a whopping 600% gain in one year.

While many market participants say there was already some sort of takeover bid, the company’s performance has also improved dramatically. In three consecutive years, it has gone from a quarterly loss to a considerable profit.

“The definition of the value of a media company depends on a set of factors. Some, such as future earnings and performance projections, have become more difficult due to increased economic and market variability,” said Amit Kumar Gupta, Founder and Chief Investment Officer of Fintrekk Capital.

He added that increased digitization and new technologies are driving changing business models and approaches across media. “The cumulative effect of market developments, valuation challenges and heightened uncertainty on M&A processes is like a perfect storm,” Gupta said.


Read also : Adani buys majority stake in Mumbai airport to make bold bet on aviation


Adani’s Takeover

On August 23, AMG Media Networks (AMNL) – a subsidiary of Adani Enterprises Ltd – announced that it was indirectly acquiring 29.18% of NDTV through its wholly owned subsidiary Vishvapradhan Commercial Private Ltd (VCPL).

The acquisition by VCPL took place by converting the warrants issued to it by Radhika Roy Prannoy Roy Holding Private Limited (RRPR) which took out a loan of Rs 403.85 crore during the financial year 2009-10 .

Along with the warrants, VCPL had the right to convert them into a 99.9% interest in RRPR in the event the loan was not repaid. VCPL exercised the warrants to acquire a 99.5% interest in RRPR. Such an acquisition will enable VCPL to acquire control of RRPR, which holds 29.18% of the capital of NDTV.

VCPL, together with AMNL, will launch an open offer to acquire up to an additional 26% stake in NDTV to comply with the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations 2011.

NDTV reported revenue of Rs 421 crore and net profit of Rs 85 crore in the 2021-22 financial year.

Adani Group, however, is now facing resistance to its takeover bid on NDTV.

Last week, RRPR said VCPL’s decision to convert the warrants into stock would require approval from the income tax department because the department had attached the Roys’ stake to NDTV as part of a a reassessment of their taxes.

In response to the claims, the Adani Group said the order only applies to NDTV shares held by RRPR and does not prevent it from converting VCPL warrants.

(Editing by Nida Fatima Siddiqui)


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