New Delhi / Mumbai: Publicly traded firms in India’s booming media and entertainment sector that outperformed the market in good times have lost significant ground in the current market slide. According to an analysis by Mint, 19 listed media firms lost a combined Rs27,834 crore, or a third, of their market value between 14 January, when the market downturn began, and at the end of trading last week.

While two firms — Global Broadcast News Ltd and Inox Leisure Ltd — lost more than 45% of their market capitalization in this period, two — Adlabs Films Ltd and Wire and Wireless India Ltd, or WWIL — saw close to 60% of their market cap being wiped off. During this period, Bombay Stock Exchange’s benchmark index Sensex lost 24.06% and the BSE Mid-Cap index (a grouping of firms with medium market capitalization) fell by 28.76%.

In the same period, Mint’s publisher HT Media Ltd saw around a 38% decline in its market value.

“Media has currently underperformed the market. It used to outperform when the market was going up. It’s a typical high-beta sector," said Anand Shah, an analyst who tracks the sector at Mumbai-based brokerage Angel Broking Ltd. Beta is a measure of a stock’s price volatility in relation to the overall market. Higher the beta, higher the volatility.

The two firms that lost close to 60% of their market cap, Adlabs Films (59.43%) and WWIL (57.52%), have specific issues and do not reflect sectoral weakness, said an equity analyst at a Mumbai-based brokerage who did not wish to be identified.

“In the case of Adlabs, there is a conflict of interest as the parent company, Reliance Anil Dhirubhai Ambani Group, is also into the same business and Adlabs’ role within the group is not clear. The problem with WWIL is that there is nothing happening in their business," he said. “On top of it, their balance sheet seems to be in a bad shape," the analyst said.

WWIL is the name for the Zee group’s cable business and its chief executive officer Deepak Chandnani declined comment, saying that he would respond after the firm’s fourth quarter results are announced in end-April.

Adlabs’ chief financial officer Venkat Devarajan said the fall in stock price had more to do with market sentiment than the company’s business. “It’s not true that there is a lack of clarity regarding our role within the group. There is a clear road map and bulk of our revenues anyway come from areas that our parent company is not into, such as exhibition and distribution. Our business remains as strong as it was when the stock price was at its peak," Devarajan added.

The sector’s two large cap (high market capitalization) stocks, SunTV Network Ltd and Zee Entertainment Enterprises Ltd, have performed relatively better. While SunTV’s loss in market cap (26.13%) has been almost in line with that of the Sensex (24.06%); Zee, which lost 18.83% of its market cap, actually did better than the index.

Interestingly, one stock weathered the storm. UTV Software Communications Ltd gained 6.98% in its market cap during the period. “We have diversified into new businesses, thus de-risking our portfolio and the market has started recognizing it," said Roma Patel, the firm’s chief financial officer. “The Walt Disney investment has also helped as the investors can clearly see that ours is a long-term story." In February, the global entertainment major Walt Disney Co. invested around Rs805 crore (about $200 million) in UTV to increase its stake to around 32.1%.

One analyst said the performance of media stocks was entirely in line with market movement and disagreed with the view that it has been particularly hit. “Being a sector with a strong mid-cap weightage, it gives the impression that it has been badly hit, but mid caps across the board have been battered," said Salil Pitale, who heads the media practice at the investment banking division of Enam Securities Pvt. Ltd.

The aggregate loss in market capitalization of media firms, at 33.5%, is closer to the 28.76% loss in the market cap of the BSE Midcap index. Experts point out that the media sector’s own pulls and pressures have been a predominant factor in the downslide in stocks. “Distribution in the broadcast sector and (rising prices of) newsprint in the publishing business have dented the balance sheets a good deal. In fact, most of the outliers either have had issues in their specific business or were at a peak in January," Pitale said.

He added that Inox Leisure, which lost about 46% in the past three-and-a-half months, was near its peak at Rs199.95 in January. The stock has traded consistently closer to Rs150, he added. Still, most analysts said media stocks still present a good investment. “... media is a defensive sector.

In the event of an economic downturn, companies will actually spend more on ads to push their products," Pitale said. “Most media stocks have got rid of the excesses associated with them, so this is a good time to buy selective stocks," said Angel Broking’s Shah.

And, most media stocks currently enjoy “buy" or “neutral" recommendation from leading brokerages companies (see chart ).