Nifty Media's Poor Show So Far May Not Lead To A Flop In 2024

The Nifty Media has fallen 17% since the beginning of year, but historical trends suggest that a rocky start may not be indicative of its yearly returns.

The index has been under pressure since the start of 2024, emerging as the top-lagging sector against modest gains of 3.34% for the benchmark Nifty 50.

During the period, the top sectoral gainers — Nifty PSU Bank and Nifty Oil & Gas — rose 29% and 25% respectively.

The Nifty Media's fall was majorly driven by underperformance of shares of Zee Entertainment Enterprises Ltd. (-42%), Nazara Technologies Ltd. (-18%), and PVR Inox Ltd. (-16%).

Zee's stock plunged after the cancellation of its $10-billion merger with Sony Group Corp.'s Indian subsidiary. It sparked a flurry of downgrades, with analysts predicting a sharp contraction in the company's valuation.

Zee's third-quarter profit also fell by more than half and failed to surpass market expectations as higher costs dented margin. The company's net profit declined 52% year-on-year to Rs 58.5 crore in the quarter ended December.

PVR Inox's third-quarter revenue declined 23% to Rs 1,545.9 crore during the period.

Though ad-revenue shows signs of recovery, volatility may persist unless occupancy stabilises as 60–65% of the business is on spot deals, according to Prabhudas Lilladher Pvt.

The company is navigating a complex landscape with headwinds expected in the fourth quarter, Elara Capital said.

The Hollywood writers' strike, lower box office collections of Bollywood movies and OTT platforms turning cautious about buying digital rights are among potential triggers that could impact future revenue streams, it said.

In the third quarter, Nazara Technologies reported mixed financial performance. Sequential revenue growth was below expectation, while the Ebitda margin was in line with expectations, according to Yes Securities (India) Ltd.

Nazara reported a sequential revenue growth of 7.8% quarter-on-quarter in a seasonally strong quarter, led by 27% increase in revenue of e-sports (contributing 56.7% to revenue) and 41.7% decline in the revenue of Gamified Early Learning (contributing 29.7% to revenue).

From 2006, the Nifty Media has fallen 15 of the 18 years during the January–February period. However, yearly returns have not necessarily been negative, with the index recording an annual decline only seven times.

In 2014, the Nifty Media fell 4.5% during the period, but it advanced 33% in the calendar year. This happened in 2023 also when index fell 14% during the first two months but ended the year with a nearly 20% gain.

Since 2006, the index fell over 14% in the January–February period in five years, out of which two (2009 and 2023) resulted in positive returns, two in decline (2008 and 2011) and one recorded marginal loss (2016).