A day after Reliance Industries (RIL) announced the consolidation of its media and distribution properties under a single entity, which will see Network 18 Media & Investments, TV18 Broadcast, Hathway Cable & Datacom and Den Networks coalescing into a single unit, shares of these firms surged to hit their upper circuits on BSE on February 18.
Shares of TV18 Broadcast, Hathway Cable & Datacom surged to hit their respective 20 percent upper circuits.
Den Networks shares also jumped to hit 10 percent upper circuit and shares of Network 18 Media & Investments were locked in their 5 percent upper circuit.
Shares of Reliance Industries, however, slipped over a percent in the morning trade.
Reliance Industries is consolidating its media and distribution properties under a single entity, making Network 18 the vanguard of the conglomerate’s advance in the media and entertainment business.
India’s largest private sector company by market value said that, as a result, Network 18, one of India’s largest listed media companies, will become an entity with about Rs 8,000 crore in annual revenue and benefit from substantial economies of scale.
Brokerages see it as a positive move for Network18 and Reliance Industries as well, for it may provide better value to the segment.
"We see this as a positive event for the Network18 and Reliance Industries as this will provide a better value to the segment as it provides better cash flow management and better cross-selling of services," said Sameer Kalra, Founder of Target Investing.
"At consolidated bases, the company will be net debt-free and can allocate free cash flow to the businesses as and when required. This might also bring the company closer to bringing a strategic investor or private equity to provide value unlocking to Network 18," Kalra added.
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