For the Network18 group FY2009 was a year of severe pressure in terms of both operations and fund availability. In our opinion, things are unlikely to get any worse.
With the advertising market showing nascent signs of recovery on the back of considerable easing of the growth concerns among corporate India, Network18’s properties are likely to bounce back.
Thus, with Network 18 sufficiently funded to take care of the gestation period of its ventures and the funding requirements of its businesses (especially for Viacom 18), being the holding company of the group it would create significant value for equity holders in the longer term.
We maintain our BUY recommendation on the stock with a sum-of-the-parts price target of Rs143.