NDTV hits 5% upper circuit on talk of buyout by SpiceJet's Ajay Singh

New Delhi Television (NDTV) is locked in upper circuit of 5% at Rs 53.10 on the Bombay Stock Exchange (BSE) in otherwise weak market, after media reports suggested that the SpiceJet’s co-founder Ajay Singh has picked up majority holding in the news channel.
 

Till 03:14 PM; a combined 67,113 shares changed hands on the NDTV counter and there were pending buy orders for 869,928 shares on NSE and BSE.

"With its founders Prannoy Roy, Radhika Roy and promoter firm RRPR Holding Pvt Ltd facing a CBI probe for allegedly concealing a share transaction, NDTV is set to change hands, it is learnt," The Indian Express reported today.

NDTV's stock has rallied 59% from its multi-year low of Rs 33.50 touched on August 9, 2017 on BSE in intra-day trade. In earlier this month, it touched high of Rs 69 on September 9, in intra-day deals. On the other hand, SpiceJet was trading 2% lower at Rs 143 after hitting low of Rs 142 on BSE.

In reply to clarification sought by bourses, NDTV said that the promoters of the Company have not entered into any agreement for sale of their stake in the Company to any person.

The Company is mindful of its obligations under Clause 30 of the Listing Regulations and shall promptly intimate you of any event required which is required to be disclosed under the said Regulations, it added.

On September 3, Business Standard had reported that the market regulator, Securities and Exchange Board of India (Sebi), has issued a show-cause notice to Vishvapradhan Commercial (VCPL) for not making public announcement and open offer after acquiring control over substantial promoter holding in NDTV. CLICK HERE FOR THE STORY

“The Company reiterates that there has been no change (actual or effective) in the control / ownership of NDTV. The promoters of NDTV i.e. Dr. Prannoy Roy, Mrs. Radhika Roy and RRPR Holding Private Limited continue to hold the majority shareholding of NDTV which amounts to 61.45% of the total shareholding of NDTV. There has been no change in the above shareholding since August 2008,” NDTV said in clarification.

Meanwhile, analysts remain positive on SpiceJet, which they feel is on a good fundamental footing. The buyout buzz if true, they feel, will put SpiceJet into an unrelated business segment.

“Though it is too early to comment on the development given the lack of clarity, the news if true is a positive for NDTV. SpiceJet’s Ajay Singh has a knack of turning around companies and could change the fortunes of NDTV going ahead. That said, this is a diversification into an unrelated area for SpiceJet. Its stock could remain under pressure for some time. That said, SpiceJet’s core business is doing well despite stiff competition, which augurs well for the stock,” says A K Prabhakar, head of research at IDBI Capital.

Recently, Edelweiss Research also put a buy rating on SpiceJet, raising its target price from Rs 138 to Rs 150. SpiceJet, they say, expects robust demand growth (10.7% CAGR over next 10 years) to exceed capacity addition. While the recent robust demand growth is driven by cyclically lower oil price driving pent-up demand, structural fundamental growth drivers are yet to play out, which will drive airline demand in long term.

“Our meeting with Mr. Koteshwar, CFO, SpiceJet (SJ), left us enthused about the company’s growth prospects. From a near collapse, SJ has managed to clock profits in past 10 consecutive quarters and continues to prune debt,” wrote Jal Irani and Yusufi Kapadia of Edelweiss in a September 6 report.

Adding: “Following the turnaround, the company has now renewed focus on profitable growth reflected in a mega aircraft order to capitalise on promising industry dynamics (structural: demand growth to exceed capacity in underpenetrated market; cyclical: benign ATF prices). Hence, we raise FY19E EV/EBITDAR to 8.5x (from 8.0x) and revise target price to Rs 150.”