New Delhi: Ever 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 are valuing India’s news media firms have come to light.
At the current market price (Monday) of Rs 545.75 per share on the National Stock Exchange (NSE), NDTV’s market capitalisation at Rs 3,518.52 crore is more than six times that of Hindustan Times (Rs 502.74 crore), which is among the country’s oldest and leading media houses with market domination in prominent geographies.
It is also believed to be twice as valuable as the TV Today Network (Rs 1,855.69 crore) with its formidable bouquet of media verticals including Aaj Tak and India Today TV (English), and nearly three times the value of the Subhash Chandra-owned Zee Media (Rs 1,188.31 crore).
What’s more, NDTV is now valued at more than 1.5 times the two big listed Hindi publishing groups, Dainik Bhaskar and Jagran. The two groups own one of the world’s top circulated newspapers and two broadsheets as well as run widely-read digital editions.
The only two listed media companies that are valued higher than NDTV are the Ambani-owned TV 18 Broadcast (Rs 7,620.33 crore) and Network 18 (Rs 7,888.76 crore).
While NDTV’s hockey stick rise (a rapid increase after a period of relative stability) from Rs 300 per share on 12 August to Rs 545.75 on 5 September over 15 trading sessions has been sparked by the takeover bid, its shares had already been rising steeply over the past year with the price being Rs 77 on 2 September, 2021.
This means that an investor holding the company’s equity shares made a whopping gain of 600 per cent within one year.
While many market players say there was already a whiff of some kind of a takeover bid, the company’s performance has also improved dramatically. In three successive years, it has turned around from a quarterly loss to sizable profit.
“Defining the value of a media company depends on an array of factors. Some, such as projections for future earnings and performance, have become more challenging due to increased economic and market variability,” Amit Kumar Gupta, founder and chief investment officer, Fintrekk Capital, said.
He added that heightened digitisation and new technologies are driving evolving business models and approaches throughout media. “The cumulative effect of market developments, valuation challenges and heightened uncertainty on mergers & acquisitions processes is akin to a perfect storm,” Gupta pointed out.
Adani’s takeover bid
On 23 August, AMG Media Networks (AMNL) — a subsidiary of Adani Enterprises Ltd — announced that it is indirectly acquiring 29.18 per cent in NDTV through its wholly-owned subsidiary Vishvapradhan Commercial Private Ltd (VCPL).
The acquisition by VCPL took place by converting warrants that were issued to it by Radhika Roy Prannoy Roy Holding Private Limited (RRPR) that took a loan of Rs 403.85 crore in the financial year 2009-10.
With the warrants, VCPL had the right to convert them into a 99.9 per cent stake in RRPR in case the loan was not repaid. VCPL exercised the warrants to acquire 99.5 per cent stake in RRPR. Such an acquisition will result in VCPL acquiring control of RRPR, which holds 29.18 per cent stake in NDTV.
VCPL, along with AMNL, will launch an open offer to acquire up to 26 per cent additional stake in NDTV to comply with the Securities and Exchange Board of India’s (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
NDTV reported a revenue of Rs 421 crore and a net profit of Rs 85 crore in the financial year 2021-22.
The Adani Group, however, is now facing resistance to its takeover bid for NDTV.
Last week, RRPR said the VCPL move to convert warrants into equity shares would require approval from the income tax department, as the department had attached stake of the Roys in NDTV as part of a reassessment of their taxes.
Replying to the claims, the Adani Group said the order applies only to shares of NDTV held by RRPR and does not restrict it from converting VCPL’s warrants.
(Edited by Nida Fatima Siddiqui)