Here is how stock markets value news organisations as NDTV shares soar following Adani’s proposal

In New Delhi: Some intriguing details regarding how stock markets are pricing India’s news media companies have come to light after Adani Group’s aggressive bid to buy news media company New Delhi Television (NDTV) sent the latter’s share price skyrocketing.

Hindustan Times, one of the nation’s oldest and most influential media organisations with market dominance in key industries, has a market capitalization of Rs 502.74 crore, less than six times that of NDTV, which has a market capitalization of Rs 3,518.52 crore at the current market price (Monday) of Rs 545.75 per share on the National Stock Exchange (NSE).

It is estimated to be nearly three times as valuable as the Subhash Chandra-owned Zee Media and believed to be worth twice as much as the TV Today Network (Rs 1,855.69 crore) with its impressive array of media verticals, including Aaj Tak and India Today TV (English) (Rs 1,188.31 crore).

The two major listed Hindi publishing organisations, Dainik Bhaskar and Jagran, are currently valued at less than half of what NDTV is worth. The two organisations also publish widely read digital editions of two broadsheets and one of the most widely read newspapers in the world.

Only Network 18 and TV 18 Broadcast, both controlled by Mukesh Ambani, are valued higher than NDTV among the listed media organisations (Rs 7,888.76 crore).

While the takeover bid sparked NDTV’s hockey stick rise (a sudden increase following a period of relative stability), its shares had already been rising sharply over the previous year, with the price being Rs 77 on 2 September, 2021. This rise from Rs 300 per share on 12 August to Rs 545.75 on 5 September over 15 trading sessions.

This indicates that a shareholder of the company’s equity shares would have experienced a staggering increase of 600% in just one year.

Although many industry participants claim there was already a hint of a takeover offer, the company’s performance has also significantly improved. It has changed from a quarterly loss to a substantial profit three times in a row.

The worth of a media corporation is determined by a variety of variables. Due to rising economic and market volatility, some have grown more difficult, such as forecasts for future profitability and performance, according to Amit Kumar Gupta, founder and chief investment officer of Fintrekk Capital.

He continued by saying that increased digitization and new technology are pushing the evolution of business models and editorial strategies across all media. The combined impact of market trends, valuation issues, and increased uncertainty on mergers and acquisitions processes, according to Gupta, is comparable to a perfect storm.

Adani’s push for control
Adani Enterprises Ltd. subsidiary AMG Media Networks (AMNL) stated on August 23 that it is indirectly acquiring 29.18% of NDTV through its wholly-owned company Vishvapradhan Commercial Private Ltd. (VCPL).

By converting warrants that Radhika Roy Prannoy Roy Holding Private Limited (RRPR) had provided to it in exchange for a loan of Rs 403.85 crore in the fiscal year 2009–10, VCPL was able to complete the transaction.

In the event that the loan was not returned, VCPL had the option to convert the warrants into a 99.9% interest in RRPR. The warrants were used by VCPL to purchase a 99.5% share in RRPR. With this deal, RRPR, which owns a 29.18% share in NDTV, will come under the management of VCPL.

To accordance with the Securities and Exchange Board of India’s (Substantial Acquisition of Shares in NDTV) Regulations, VCPL and AMNL will make an open bid to purchase up to 26% more of NDTV.

In the fiscal year 2021–2022, NDTV recorded revenue of Rs. 421 crore and a net profit of Rs. 85 crore.

However, the Adani Group is currently encountering opposition to their purchase offer for NDTV.

Last week, RRPR stated that the income tax department would need to approve the VCPL effort to convert warrants into equity shares because the government had attached the Roys’ holding in NDTV as part of a review of their taxes.

In response to the allegations, the Adani Group stated that the ruling only pertains to NDTV shares held by RRPR and does not prevent it from converting the warrants of VCPL.

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