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MEDIA
BUDGET HIGHLIGHTS & IMPACT
n Continued emphasis on rural growth
Impact: Positive on the media sector (advertising revenues). Expenses on schemes
such as Bharat Nirman have been augmented significantly, and attempts are
being made to improve credit availability for the farm sector. These are longterm
positives for consumption in rural areas, and will impact media companies.
We believe regional newspapers (DB Corp, Hindustan Media Ventures, Jagran
Prakashan), and GEC players (Zee Entertainment, Sun TV) are likely to benefit
from the same.
n Changes in MAT and surcharge
Impact: Neutral. The government has changed the MAT rate to 18.5% from
18% currently, and has simultaneously reduced the surcharge to 5% from
7.5%, which is largely a neutral event for all companies covered under MAT.
n Extension of concessional customs duty (5%) to mailroom equipment
Impact: Currently, concessional customs duty is applicable to high speed printing
presses. This announcement’s impact is likely to be insignificant; given low
dependence of companies on imported items in mailroom equipment, as also
the low capex requirements thereof.
n Full exemption on customs duty on jumbo film rolls of 400 feet and
1000 feet:
Impact: The announcement shall have an impact on companies involved in
the production of films, and is likely to benefit companies like UTV Software
and Eros International. However, the impact of the same is likely to be small,
given low expense exposure to these items.
Lack of any other announcement makes the budget a neutral event for media sector.
The government has sounded positive on taking measures to contain inflation
in the long-term, which, along with emphasis on rural sector growth, is a positive
for media companies. We had expected a hint of reforms in radio FM, and
changes relating to digitization, in the budget sound-bytes. Absence of the same is
a minor disappointment, and announcements on these are likely delayed, not denied.
We believe media companies remain fundamentally strong, on the back of strong
domestic demand growth and rising brand consciousness/ adoption. Our investment
thesis on the media sector is derived from expectations of strong growth in
advertising expenditures, higher subscription revenues, as well as higher monetization
among companies that have invested behind new properties/ genres. The
budget shall have minimal impact on our investment ideas/ earnings estimates.
Our favored picks in the space are HT Media, Sun TV, and ENIL.
Softness in consumption growth, due to higher inflation or other macroeconomic
factors, is the largest risk to our sector view.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
MEDIA
BUDGET HIGHLIGHTS & IMPACT
n Continued emphasis on rural growth
Impact: Positive on the media sector (advertising revenues). Expenses on schemes
such as Bharat Nirman have been augmented significantly, and attempts are
being made to improve credit availability for the farm sector. These are longterm
positives for consumption in rural areas, and will impact media companies.
We believe regional newspapers (DB Corp, Hindustan Media Ventures, Jagran
Prakashan), and GEC players (Zee Entertainment, Sun TV) are likely to benefit
from the same.
n Changes in MAT and surcharge
Impact: Neutral. The government has changed the MAT rate to 18.5% from
18% currently, and has simultaneously reduced the surcharge to 5% from
7.5%, which is largely a neutral event for all companies covered under MAT.
n Extension of concessional customs duty (5%) to mailroom equipment
Impact: Currently, concessional customs duty is applicable to high speed printing
presses. This announcement’s impact is likely to be insignificant; given low
dependence of companies on imported items in mailroom equipment, as also
the low capex requirements thereof.
n Full exemption on customs duty on jumbo film rolls of 400 feet and
1000 feet:
Impact: The announcement shall have an impact on companies involved in
the production of films, and is likely to benefit companies like UTV Software
and Eros International. However, the impact of the same is likely to be small,
given low expense exposure to these items.
Lack of any other announcement makes the budget a neutral event for media sector.
The government has sounded positive on taking measures to contain inflation
in the long-term, which, along with emphasis on rural sector growth, is a positive
for media companies. We had expected a hint of reforms in radio FM, and
changes relating to digitization, in the budget sound-bytes. Absence of the same is
a minor disappointment, and announcements on these are likely delayed, not denied.
We believe media companies remain fundamentally strong, on the back of strong
domestic demand growth and rising brand consciousness/ adoption. Our investment
thesis on the media sector is derived from expectations of strong growth in
advertising expenditures, higher subscription revenues, as well as higher monetization
among companies that have invested behind new properties/ genres. The
budget shall have minimal impact on our investment ideas/ earnings estimates.
Our favored picks in the space are HT Media, Sun TV, and ENIL.
Softness in consumption growth, due to higher inflation or other macroeconomic
factors, is the largest risk to our sector view.
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