Adani move sizzles media stocks. Is it Zee or NDTV on the radar?
The Adani Group has hired a new chief for its entry into the media sector, pushing media stocks higher to hit circuit breakers on Monday and fuelling speculation of an acquisition move by the Gujarat-based conglomerate.
The billionaire Gautam Adani-led group named journalist Sanjay Pugalia, until recently the president at Quint Digital Media, as the CEO and editor-in-chief of its media vertical during the weekend.
The group said Pugalia will lead its media initiatives and support the corporate communication team. He will report to group scion Pranav Adani and will work closely with Sudipta Bhattacharya, CTO of the group and CEO of its US operations.
Pugalia comes with experience working in digital, television and print. Prior to Quint, he led the CNBC-Awaaz Hindi television channel that’s part of the TV18 group controlled by billionaire Mukesh Ambani, India’s richest man.
The Adani Group has been diversifying aggressively in the last five-seven years partly via an inorganic growth strategy. A senior appointment in a sector it has not been involved directly fuelled rumours that it is looking at some of the existing media houses as an entry point.
Zee or NDTV?
Two news media organisations saw their stock prices hit circuit breakers on Monday. New Delhi Television Ltd (NDTV) and Zee Media Corporation were the counters that saw their shares hitting the upper circuit.
Zee Media is the news business arm of the Essel Group, which is known for a string of TV channels including its flagship Zee Entertainment Enterprises Ltd.
NDTV’s share price rocketed nearly 10% to Rs 79.65 a share, valuing the company at Rs 513 crore. Zee Media’s share price rose about 5% to Rs 11.78 apiece, giving it a market capitalisation of Rs 737 crore.
NDTV had in the past faced heat over alleged tax evasion that the company denied. Zee’s parent Essel has been facing a financial crunch. Essel’s flagship firm Zee Entertainment, which houses its entertainment channels, has been facing shareholder activism over strategy and corporate governance.
The Essel group’s debt woes have meant it has been losing a grip on the listed companies. The promoter stake in Zee Media itself has shrunk from over 55% to under 15% in the last two years. This makes it a prime target given its brand recall and need for cash infusion to sustain its operations.
NDTV, which is still majority owned by its founders Prannoy and Radhika Roy, has been in the rumour mills for being a takeover target for several years now.
Ambani vs Adani in the making?
The impending move to enter the media business could also pitch Gautam Adani against Mukesh Ambani, who controls Network18 and TV18 with news channels like ETV and CNBC-TV18 among several others.
Mukesh Ambani-led Reliance Industries had acquired control of Network18 after converting into equity the debt instruments it used to back its erstwhile promoter Raghav Bahl.
Bahl, who now runs Quint Digital, has a partnership with Bloomberg for its digital publication but has been unsuccessful in securing government approval to enter the TV news business.
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5 best swing trading ideas for the week
5paisa research provides investors with the best short-term and long-term investing ideas. Every morning we offer 5 best stocks to buy, in the afternoon we provide five best buy today and sell tomorrow (BTST) ideas, while at the beginning of every week we provide five best swing trading ideas. We regularly update our success rate and issue special commentary during special market events.
Swing Trading is a kind of fundamental trading strategy where positions are held for more than a single day. Since corporate fundamentals generally require several days or even a week to cause sufficient price movement to render a reasonable profit, most swing traders are also considered fundamentalists as well.
Some others also explain swing trading as a trading strategy in the middle of day trading and trend trading. While day traders hold stocks not more than a day the trend trader holds stocks as for a week or even a month or months based on fundamental trends. Swing traders trade in a particular stock based on intra-week or intra-month oscillations between pessimism and optimism.
Here is the list of 5 best swing trading strategies for the week
HLE GLASSCOAT (HLEGLASS)
Current market price: 5175
Stop loss: 5040
Target 1: 5350
Target 2: 5520
Reason: Strong volumes seen for HLE Glass share
AVENUE SUPERMARTS (DMART)
Current market price: 4240
Stop loss: 4100
Target 1: 4430
Target 2: 4600
Reason: Momentum is positive for DMART share
TATA ELXSI (TATAELXSI)
Current market price: 5491
Stop loss: 5135
Target 1: 5650
Target 2: 5800
Reason: Further buying is expected for Tata Elxsi share
VENKEY'S INDIA (VENKEYS)
Current market price: 3060
Stop loss: 2975
Target 1: 3130
Target 2: 3250
Reason: Sideways move is likely to end for Venkey’s India share
DCM SHRIRAM (DCMSHRIRAM)
Current market price: 1037
Stop loss: 1000
Target 1: 1065
Target 2: 1110
Reasons: Uptrend is expected to start in DCM Shriram stock
ITC stock zooms to 20-month high as Jefferies ups target
ITC Ltd, India’s biggest cigarette maker, touched its highest stock price level in 20 months after brokerage house Jefferies raised its forecast and the government kept taxes on tobacco unchanged.
The company, which has diversified into consumer goods, hotels, paper and other sectors over the last many years, has underperformed the stock market in recent years despite being among the picks of several analysts.
However, its shares have rallied in the past few days and climbed as much as 4% to hit Rs 239.40 apiece on the BSE on Monday. This is its highest level since January 22, 2020, stock-exchange data show. The shares ended at Rs 233.6 apiece, up 1.1% from Friday’s close.
The new milestone came after the company’s shares jumped 8% last Thursday. The stock’s rise on Monday can be attributed to two factors. One, the Goods and Services Tax (GST) Council kept the cess on tobacco unchanged at its meeting last Friday.
“This is a positive development for ITC, which is also set to see a recovery in cigarette volumes and earnings in the coming quarters,” Jefferies said in a note.
ITC’s cigarette volumes were impacted during the April-June quarter, when India was hit hard by the second wave of the Covid-19 pandemic. However, volumes have been recovering since then as the rate of virus infections slowed.
The second factor was the Jefferies report itself. The brokerage house has an “outperform” rating on the ITC stock and revised its target higher to Rs 300 from Rs 275.
ITC makes almost four of five cigarettes in India. The cigarette vertical still accounts for a major chunk of its business even though it has expanded into a wide variety of areas ranging from FMCG and hotels to agribusiness and IT.
To be sure, the ITC stock is still nearly 30% below its peak in 2017 when it had reached Rs 339 apiece. ITC’s share price has been sliding for the last two years in particular, much before the onset of the coronavirus pandemic.
While most large-cap stocks in the BSE Sensex and the Nifty 50 had bounced back from the lows of early 2020, when the lockdown in the country hit most businesses, ITC just about recovered. The Sensex and Nifty 50 have more than doubled since March 2020 while ITC, even after the recent rally, is up 62% in the same period.
This is because the company has been facing the ire of some institutional funds that base their investment decisions given their environmental, social and governance (ESG) norms. While ITC has a large business that is ESG-compliant, these funds tend to discount the company due to its cigarettes business that still contributes a bulk of its profits.
Brokerage ICICI Securities summed up these concerns at the time of ITC’s June quarter earnings. “Investor perception of the cigarette business and its long-term prospects have been one of the biggest drags for the stock price performance in the last five years,” the firm said.
Paras Defence IPO off to flying start as retail investors lead the rush
The offering of 71.4 lakh shares, excluding anchor allotment, was covered 16.6 times after receiving bids for 11.8 crore shares at the end of the first day.
Retail investors led the bidding. Their quota of 35.86 lakh shares was covered 31.36 times after getting bids for 11.24 crore shares. The non-institutional investors’ quota was subscribed 3.77 times while institutional investors mostly stayed on the sidelines.
The defence engineering company’s IPO began today as it seeks to benefit from bullish sentiment that has pushed stock markets to record highs. The IPO will close on Thursday. It has set a price band of Rs 165-175 a share for the IPO.
Ahead of the IPO, the company raised Rs 51 crore from anchor investors including existing investor Abakkus. It had also mopped up Rs 34 crore through a pre-IPO sale.
Paras is the 42nd company to float an IPO in 2021, underlining the rush among Indian firms to launch share sales this year. In addition, an equal number of companies have filed their draft red herring prospectuses (DRHPs) and are awaiting approval from the Securities and Exchange Board of India.
This IPO rush comes even as benchmark indices continue to touch new highs. The 30-stock BSE Sensex, for instance, hit another record on Friday, going past 59,700 before cooling off. On Tuesday, the Sensex was trading around the 58,600 level.
The Paras IPO comprises a fresh issue of shares worth Rs 140.6 crore and an offer for sale of up to 17.24 lakh shares by its existing shareholders including the promoters Sharad Virji Shah, Munjal Sharad Shah and Ami Munjal Shah.
The founders—chairman Sharad Virji Shah and managing director Munjal Sharad Shah—hold a 59.53% stake in Paras Defence. The total promoter and promoter group stake in the company is 79.4%.
The company plans to use the money raised from the fresh issue to buy machinery and equipment. It also plans to fund working capital requirements, repay debts and use the money for general corporate purposes.
Paras Defence’s business
The company designs, develops, manufactures and tests a range of defence and space engineering products. It caters to four major segments—defence and space optics, defence electronics, electro-magnetic pulse (EMP) protection solutions, and heavy engineering.
It is also the sole Indian supplier of critical imaging components such as large-sized optics for space applications. It has two manufacturing facilities in Maharashtra, located at Nerul in Navi Mumbai and Ambernath in Thane.
The Nerul plan is an advanced nano-technology machining centre to produce high-quality optics and ultra -precision components. The Ambernath facility makes heavy engineering products such as flow-formed motor tubes, vacuum brazed cold plates, titanium structures and assemblies. The company is expanding the Nerul facility.
Paras gets most of its revenue from defence public-sector undertakings and government organisations involved in space research. Its customers include Bharat Electronics Ltd, Hindustan Aeronautics Ltd, Bharat Dynamics Ltd, Hindustan Shipyard Ltd, Electronic Corporation of India Ltd, Tata Consultancy Services Ltd and Solar Industries India Ltd. Its foreign customers include Advanced Mechanical and Optical Systems of Belgium and Tae Young Optics Company of South Korea.
Paras Defence’s financials
The company’s top line hasn’t grown in the last two years and its profit has fallen.
Its consolidated total income was Rs 144.6 crore for the year ended March 31, 2021, down from Rs 149 crore and Rs 1,57.17 crore for the previous two years.
Its consolidated profit after tax fell to Rs 15.78 crore in 2020-21 from Rs 19.66 crore the year before and Rs 18.97 crore in 2018-19.
The company had an order book of Rs 305 crore as of June 30, 2021.
Will Puranik Builders be third time lucky as it files for IPO again?
Real estate developer Puranik Builders Ltd has filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India to raise funds through an initial public offering (IPO).
The IPO comprises a fresh issue of shares worth Rs 510 crore and an offer for sale of up to 9.45 lakh shares by the company’s promoters, according to the DRHP filed with the capital markets regulator.
The offer for sale involves Ravindra Puranik and Gopal Puranik divesting up to 4.725 lakh shares each.
The Mumbai-based developer may also consider a pre-IPO placement to raise as much as Rs 150 crore. If it does so, it will reduce the amount to be raised via the fresh issue of shares in the IPO.
The company plans to use the fresh proceeds to repay loans and for other general corporate purposes.
Elara Capital (India) Pvt. Ltd and YES Securities (India) Ltd are the merchant bankers managing the issue.
This is the company's third attempt to go public. The company had first approached SEBI for IPO approval in June 2018. It filed its DRHP again in November 2019 and even received regulatory clearance to launch the offering but didn’t follow through with its plans.
Puranik Builders’ business
The company has been operating for three decades. It develops housing projects in the mid-income affordable segment in the Mumbai Metropolitan Region and Pune Metropolitan Region.
As of July 31, 2021, it had developed almost six million square feet of space across 35 completed projects in the two regions.
It also had 23 ongoing projects with an aggregate developable area of 14 million square feet with ticket sizes ranging between Rs 47.3 lakh and 1.25 crore in the MMR and between Rs 34.1 lakh and Rs 97.2 lakh in the PMR for mid-income affordable housing segment. The ticket size ranged from Rs 11.5 lakh to 34.2 lakh for low-income affordable housing segment.
In addition, it has 17 forthcoming projects with an aggregate estimated developable area of 13.6 million square feet.
The company develops most of its projects through joint development or joint venture arrangements with land-owners. As of July 31, it had carried out 32 projects on its own and 43 projects through the joint venture model. The company also has a land bank of 70.09 acres.
Puranik Builders’ finances
The company’s total income fell to Rs 513.56 crore for 2020-21 from Rs 730.24 crore and Rs 721.23 crore for the previous two financial years, as sales were affected because of Covid-19 and measures to tackle the pandemic including lockdowns.
“Due to the nationwide lockdown and inability to conduct site visits, sales enquiries from prospective customers that typically follow site visits were significantly affected,” the company said.
Similarly, its net profit for 2020-21 dropped to Rs 36.3 crore from Rs 51.23 crore for 2019-20 and Rs 71.27 crore the year before.
Earnings before interest, tax, depreciation and amortisation (EBITDA) for 2020-21, 2019-20 and 2018-19 were Rs 164.27 crore, Rs 192.29 crore and Rs 209.26 crore, respectively. The EBITDA margin came in at 32.71%, 26.68% and 29.26% for the last three years.
For the four months ended July 31, 2021 it clocked a net profit of Rs 17.5 crore and EBITDA of Rs 51.3 crore on total income of Rs 191.13 crore.
Zee Entertainment to merge with Sony. All you want to know
India may have just got its biggest entertainment deal yet. The beleaguered Zee Entertainment Enterprises Ltd has got a saviour, with the Indian subsidiary of the Japanese media and electronics giant Sony Corp agreeing to merge the company with itself and taking a majority stake.
As part of the deal, which the Zee board has approved in principle, Sony Pictures Networks (SPN) India will effectively hold a 52.93% stake in the merged entity. The remaining 47.07% will remain with Zee shareholders.
The deal announcement propelled Zee’s shares higher by 25% to as much as Rs 319.50 apiece on the BSE. The shares later cooled off a tad to Rs 302.40 apiece, valuing the company at Rs 29,000 crore.
What exactly is Sony getting in the deal?
All assets owned by Ze including the entertainment TV channels it owns, its OTT platform Zee5, its catalogue of TV and online programmes and movies, and its film studio Zee Studios. These will be controlled by the merged entity.
The merged entity will also house Sony’s TV channels (75 in all), the OTT platform Sony LIV, Sony Pictures Films India and Studio NXT, which makes digital content.
The new entity will effectively own the biggest suite of entertainment content services in India, bypassing Disney India and Star India.
Why is Sony the majority owner here?
This is because SPN India, Sony’s India entertainment arm, is investing an additional $1.575 billion or Rs 11,615 crore, to capitalise the merged entity. This money will allow the new entity to grow its business further.
Had Sony not infused more cash, Zee shareholders would have held a majority stake with 61.25% shares.
What did Zee’s board of directors say about the merger?
Zee’s board said the “merger will be in the best interest of all the shareholders and stakeholders”. The board also said that the deal is in line with Zee’s strategy of achieving higher growth and profitability as a leading media and entertainment company across South Asia.
Who will head the merged entity?
Zee managing director and chief executive officer Punit Goenka will head the combined company for five years. This is significant because a group of Zee’s institutional investors led by Invesco had been demanding his ouster.
It is unclear if Sony India chief NP Singh will continue to be a part of the merged entity or will move on to another role.
How much stake does Zee’s promoter family own? What can they now do?
The existing promoter family of Zee, including Goenka and his father Subhash Chandra, currently own barely 4% stake in Zee Entertainment.
However, as per the deal with Sony, they will have an option to increase their shareholding to as much as 20% in the normal course of business.
Who will have a majority on the board?
A majority of the board of directors of the merged entity will be nominated by Sony Group.
What happens to Zee’s news business?
The news business is not part of the merger deal and remains under Zee Media Corp, which is controlled by Subhash Chandra’s Essel Group.
However, media reports this week speculated that Zee Media could be on the radar of billionaire Gautam Adani, India’s second-richest man who has announced his group’s entry into the media business.