Media shares rally as government hikes ad rates for print media by 25%

HT Media, Hindustan Media Ventures, Jagran Prakashan and DB Corp were up 8% to 17% on the BSE in intra-day trade on Wednesday.

Shares of media companies, mainly those which are engaged in publishing business, rallied up to 20 per cent on the BSE in early morning trade Wednesday after the government hiked advertisement rates for print media by 25 per cent.

HT Media has surged 17 per cent to Rs 46 on the back of an over five-fold jump in trading volumes. Till 09:32 am, a combined 1.84 million equity shares changed hands on the counter on the BSE and NSE.

Sandesh has zoomed 20% to Rs 890 on the BSE in intra-day trade. A combined 26,295 equity shares changed hands on the counter on the NSE and BSE so far.

Hindustan Media Ventures (11 per cent at Rs 141), Jagran Prakashan (10 per cent at Rs 125) and DB Corp (8 per cent at Rs 183) were up in the range of 8 per cent to 11 per cent on the BSE in intra-day trade today. In comparison, the S&P BSE Sensex was up 0.65 per cent or 233 points.

The Information & Broadcasting Ministry hiked the advertisement rates for print media by 25 per cent for a period of three years. The decision, which comes into effect immediately, is expected to benefit small and medium newspapers.

For the first half (April-September) of the financial year 2018-19 (H1FY19), these five companies had reported 51 per cent year-on-year (YoY) drop in their combined net profit at Rs 302 crore. They had posted an aggregate net profit of Rs 611 crore during the same period of FY18.

HT Media had posted a net loss of Rs 30 crore in H1FY19 against net profit of Rs 130 crore in H1F18.

The rating agency CRISIL in November had revised its outlook on long-term rating of the HT Media to 'Negative' from 'Stable'.

The outlook revision factors in CRISIL's belief that HT Media's business risk profile may weaken over the medium term if operating performance takes longer than expected to recover.

“The revenue from operations declined 6. 6 per cent in the first half of fiscal 2019, compared with the corresponding period the previous year. The revenues were impacted by muted ad spends in key advertising sectors and timing of the festive season. Further, operating margin declined to 2 per cent during the said period as compared to 15 per cent in the previous fiscal. The margins were largely impacted by increase in raw material costs besides the negative leverage caused by the decline in revenues. Newsprint is a key input for the newspaper industry, accounting for majority of operating costs and has seen a price increase of more than 30 per cent over the last few quarters,” CRISIL said in a statement.