Pick of the Week:
Raj Television Network Ltd: Long term Gold:
BSE Code: 532826
CMP: Rs.54.30
Book Value: Rs.86.75
Market Cap: Rs.70.47 Cr

Introduction: Raj Television Network Limited is one of the largest Tamil television and broadcasting company in southern region. The company incorporated in 1994, broadcasts five channels presently in various southern languages. Raj TV, its flagship television channel launched in 1994 was the first general entertainment channel of the company. Besides Raj TV, the Company promotes Raj digital plus, an exclusive movie channel, two Raj Musix, 24X7 Music Channels, one in Tamil and other in Kannada and one 24X7 News Channel. Raj TV and Raj digital plus are free to air in Chennai and pay channels outside Chennai.
Other Channels are free channels. The company gets its revenue primarily form advertisement and subscription of channels. The Company has also rolled into movie production and distribution business.
Shareholding Pattern: The promoters hold 72.48% while the general public holds 27.52%. In the general category, FIIs hold 4.07%.
Triggers:

1. As a part of potential external growth strategy, Raj Television Network Ltd has ventured into movie distribution platform for distributing theatrical rights of movies from time to time. The company has acquired distribution rights of upcoming Tamil movie, “Kutty” for some specified areas in Tamil Nadu, Starring one of the top line Tamil Star Dhanus. The movie is expected to be released all across shortly. The company is hopeful of getting better revenue from such distribution.
2. The company has entered into the business of movie production and produced few movies from time to time. Some of is upcoming movies are almost in the post production stage and awaiting for release.
3. Since the Indian movie sector have started recovering from the market slowdown and more and more movies are being produced and released in India , within a very short span of time, the Company feels that it can manage to recover it’s investment in few weeks of release of the movies and also there is substantial scope to grow further as Tamil movie market is expanding both geographically and economically across the world.
4. The subscription revenue of the company are expected to grow because of availability of various distribution platforms like cable, CAS, DTH, IPTV, VOD etc. Further, the increasing spends on advertisement by the industry houses will boost the further growth. It is to be noted that the Company's channels are now available in DTH, IPTV and other digital platforms besides cable distribution.
5. The Company is continuously making efforts to entertain the viewers with good programs and quality contents. The company always experiments on the viewer’s demand and choice and designs its contents and programs in the viewer’s prospective. The Company shall look forward to give better and quality entertainment to strengthen its brand and popularity in future.
6. As part of future projection and strategy, the company is spreading its subscription base by way of launching new channels. During fiscal 2008-09 the Company aunched one 24X 7 music channel in Kannada and has pipelined few more new channels in various languages. This will add substantially to revenue base of the company. The Company has already got the approval for one overseas channel RAJTV-ASIA from Ministry of Information and Broadcasting (MIB) and working on for airing of the same in overseas market. In order to compensate against the sluggish market, the Company is innovating few low budget programs to have cost effective benefit.
7. Against the total projected utilization of Rs.52.81 Crores from the IPO funds, an amount of Rs.38.67 Crores has been utilized towards Acquisition of contents, strengthening facilities, purchase of new equipment, up gradation of existing equipment, production of Movies, Construction of Studio and general corporate purpose. This is expected to generate good revenues in the next few quarters.

Conclusion: Considering the above mentioned condition, the stock of Raj Television Network Ltd can be purchased for the medium to long term for a target of Rs.90. In the short term, the stock could drift towards, Rs.57—60 mark. However, the scrip should be purchased with a long term play in mind. The company has huge potential and considering this the scirp looks undervalued at this point of time.
Note: The stock was recommended to the Paid Groups (and this report sent to them) on this Sunday (7th March, 2010). The stock has already hit its target.