Ms. Bectors going public
Investors should not confuse Ms. Bectors with Britannia. It’s a B2B business. It doesn’t have that strong brands or that kind of flavor as far as the company goes to make it multiple times what FMCG stores are. Many of their brands are clearly unknown, and then there are institutional sales and exports that are not as profitable as the branded business. Although they have been around for decades, they have been able to expand the branded business.
Britannia has done a great job over the last 10 years despite lagging behind market leader Parle. Ms. Bectors’ valuations are also higher, the rate of return is nowhere comparable to the big FMCG companies, and at least I don’t want to go into that and invest in Ms. Bectors on the listing. However, due to liquidity flows and various dynamics in the IPO market, there can usually be very strong trading rallies on the listing, and then at least in the first trading sessions after that, and then they tend to hiss.
With that in mind, one could try to leave Ms. Bectors today or in the next trading session and then reevaluate once the situation has calmed down and prices are at a more reasonable level. What management has to say after the listing and how the first two to three quarters are developing will, in my opinion, give a good impression of the business, valuations and future growth prospects. Therefore I would like to make a mistake Ms. Bectors when purchasing a new one. Existing investors who have some allocation should consider getting out in the next trading session.
One when 100% FDI turns out to be a game changer for DTH players
DTH and cable television are now more of an old economy, more passé. As for OTT, there is a lot more excitement and the street is gradually rating companies like Zee, Sun TV, and a few other media companies based on their OTT or digital endeavors. I don’t think it will be a game changer at all. We’re pretty positive about media companies with the usual disclosure that we are and our customers are invested. We’re very positive at Sun TV where we’re seeing decent value that can be unlocked once their OTT operations speed up. It is a cash rich company and has a very strong market share and position in South India that it will surely use to grow its media business and ever growing subscriptions.
Much of the advertising spending has also returned to the industry. For Sun TV, we should see good earnings growth. Zee is another interesting company. Their Zee5 was a complete success and they too experienced slower ad spend, but now that is normalizing very quickly. There are some concerns about corporate governance and intragroup debt, but I think these are largely addressed. I see these two companies positively. I wouldn’t want to go with distribution companies like Dish TV that really haven’t added much value over the past few decades.