Recommendation: Buy
CMP = Rs 261 (at the time of this recommendation)
Price target: Rs 486
Key points:
- TV18 stock has witnessed a slide in the past month and I believe it has got to do more with market sentiment rather than any weakening of the company's fundamentals, though macro risks of an overall slowdown in business activity cannot be negated. I believe the following factors have led to a correction in the price of the stock:
- An overall correction in the stock market due to the dependence of CNBC and Awaaz for their advertising revenues on the financial services business a significant portion of which comes from market participants.
- A substantial portion of Web18's revenues comes from subscription-based portals such as moneycontrol.com, poweryourtrade.com and commoditiescontrol.com. A slowdown in stock market activity is perceived to directly affect the growth of these businesses.
- The growth of the relatively new business of Newswire18 depends to a large extent on the mood of stock market participants.
- The postponement of Web18's listing and the consequent unlocking of value for TV18's shareholders, which was perceived to be a trigger.
- However I am quite buoyant about TV18 and believe that it will shoot up like a phoenix. I would recommend a Buy call on this scrip with price target of Rs 486 over next 7-8 months.
