What D-Street analysts said on Adani's takeover bid for NDTV

Shares of NDTV climbed 5 per cent in Wednesday's trade, even as the open offer by Adani Group firms for acquiring a 26 per cent stake in the media firm at Rs 294 apiece was at a 19.71 per cent discount to Tuesday's closing price of Rs 366.20.

Avinash Gorakshakar, Head-Research at Profitmart Securities, said since the open offer is at a discount to the prevailing market price, it doesn't look attractive, and it is therefore likely that going ahead, the open offer price could be hiked.

"For NDTV shareholders, this Adani deal and taking management control would be positive in the long term and will also fulfil Adani's intentions of making a strong entry in the broadcasting space," said Gorakshakar.

Independent market expert Kush Ghodasara said NDTV was a pioneer in private news channels for a long time and that many business tycoons had shown interest in the company in the past.

"With competitors rising in the media sector, NDTV lost market share. But if this hostile takeover goes through, I believe NDTV will have new capital to show some aggression, and it will try to get back its lost feet," he said.

VCPL, a wholly owned subsidiary of Adani firm AMG Media Networks, exercised warrants to acquire 99.5 per cent stake in RRPR Holdings. RRPR, in turn, holds 29.18 per cent stake in NDTV. Prannoy Roy and Radhika Roy still hold 32.26 per cent stake in the company.

The move has triggered an open offer to acquire up to a 26 per cent stake in NDTV, according to Sebi's takeover regulations.

In a series of tweets, Deepak Shenoy of CapitalMind said it was similar to the Network18 takeover by Reliance Industries, where the promoter of the media company had way too much debt and needed a bailout.

VCPL did not pay to convert the warrants today, Shenoy said. "They have already paid in 2009. They get to own shares of NDTV now, and the open offer price is a Sebi regulation based calculated price of Rs. 294," he said.

"Current price is some Rs 370+, so it's unlikely anyone will tender shares," he said.

Karan Taurani of Elara Capital said that valuations paid for this acquisition are at a healthy premium, which is 3.5 times sales, after factoring in the 20 per cent discount on CMP, considering peers in the TV broadcasting space.

"This move will enable a large corporate house backing for a news channel after Reliance/Times group to own the TV18 and Times Now/ET Now respectively, which enables better distribution via the homegrown platform. We believe, the news is a genre, which will have the least negative impact due to consumer shift towards digital," he said.

Among NDTV's biggest public shareholders is LTS Investment Fund, which owns a 9.75 per cent stake in the company. As per Trendlyne, this FPI held 13 domestic stocks worth Rs 19,530.70 crore and has a 1.1-1.7 per cent stake in four Adani group companies such as Adani Transmission, Adani Enterprises, Adani Total Gas and Adani Power.

Taurani said NDTV has a stronger presence in the English news genre, currently dominated by Times Now and Republic. In terms of the Hindi news channels, NDTV is usually the third place after Aaj Tak and India TV.

"With TV viewing becoming more selective amidst regulations like NTO 2.0 and the market dominance by larger players in the news genre, we don’t expect sustainability in these premium valuations for NDTV over the near to medium term," he added.

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