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Media stocks soar amid election advertisement spending boom
Media stocks soar amid election advertisement spending boom
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Media stocks have been on a tear for the past five days, driven by expectations of higher advertisement revenues during the upcoming election season and other stock-specific factors such as declining newsprint prices.Entertainment Network India Ltd (ENIL), the operator of Radio Mirchi and a unit of Bennett, Coleman and Co., surged 17 percent in the past five trading sessions. Print media rival HT Media Ltd, the publisher of Hindustan Times and Mint, gained 2.65 percent over the same period.The rally, initially led by Dainik Bhaskar publisher DB Corp. and television network operators Network18 Media & Investments Ltd and Sun TV, is now more broad-based, with investors betting on radio and print companies as well. In the past six months, Network 18 and TV18 Broadcast Ltd have gained 87 percent and 53 percent, respectively, while DB Corp rose 63 percent and Sun TV gained 35 percent.Although stock-specific factors played a role, analysts Moneycontrol spoke to attributed the recent surge to expectations of increased ad revenues in the run-up to the elections.Media companies have emerged as some of the biggest beneficiaries of political party spending in the run-up to elections. With the Bharatiya Janata Party and its rival political parties set to unleash an advertising blitz over the next six months, media stocks, including television, print and radio, are poised to reap the rewards.“There is an expectation that advertisement spending will see a strong momentum over the next six to eight months due to the elections,” Karan Taurani, Senior Vice President at Elara Capital, said, adding that general elections positively influence radio, television, and print advertising, which is the reason for the rally in media stocks.Ashish Goel, Managing Partner and Chief Executive Officer of InvestSavy PMS said, “Revenue of media companies should increase as political parties are likely to give them brisk business.”Also read Meet the manager who believes in small-cap monopolies, be it mango pulps or kitchen sinkTo be sure, the growth in advertisement revenue during the last quarters of fiscal 2014 and 2019 (coinciding with years when parliamentary polls were held) was more or less the same as in non-election years. A Moneycontrol analysis showed that advertising revenues increased 12.7 percent, 14 percent, and 14.3 percent from a year earlier, respectively, for Jagran Praka...