Den, promoted by a key member of the TV18 team, Sameer Manchanda, is down almost 70%. Even news of a joint venture with Turner hasn’t helped
Moneylife Digital Team
After its high-profile IPO (initial public offering) in 2009, Den Networks, promoted by a key insider of the TV18 group (Den's chairman and managing director is Sameer Manchanda who helped raise hundreds of crores for TV18) has being going the same way as the TV18 group—savagely destroying shareholder value. Interestingly, TV18 has a stake in Den.
After a couple of disclosures regarding insider trading during November last year, the stock has been on a steady decline. Two months after the announcement of the Star Den-Zee Turner joint distribution venture, the stock is close to its nadir.
"The counter has been marked by insider trading. The company has done well otherwise, but its short term performance is not up to the mark," an analyst told Moneylife, preferring anonymity.
Though the news of compulsory digitisation in February and then of the Den-Turner pact in May created some positive sentiment, the stock's fall remains unbroken. On Friday, Den Networks closed at Rs81.50 on the BSE, 64% down from Rs215.10 in 23rd November last year.
For about a year since its listing in November 2009, the price of Den stayed close to its issue price. On 6th August last year, Den Networks peaked at Rs256. But after it disclosed insider selling as per SEBI (the Securities and Exchange Board of India) norms in November, its stocks took a big hit. The first three disclosures came on 19th November, about company CFO (chief financial officer) Rajesh Kaushall selling some shares which were of pre-IPO acquisition. More disclosures followed on 22nd and 24th November about the digital services president of the company Vikas Dali selling shares, and notices reappeared on 21st January and 3rd March.
On 18th November 2010, the company was trading at Rs229.25. On 23rd November 2010, the stock had fallen by 6% to Rs215.10. From 23rd November 2010, the tumble started, and till 22nd July, it had suffered a 64% decline.
When TRAI (the Telecom Regulatory Authority of India) announced compulsory digitisation of analogue services on 4th February, the company was trading at Rs143.20. While the media sector had a positive outlook about TRAI's move, Den's slide continued. The company attributed its performance to the slow pace of digitisation. On 1st April, the stock reached its lowest level at Rs78.
Revival started with the announcement of the joint distribution deal between Star Den and Zee Turner on 26th May, but even that failed to check the tumble. "We have to see how the company fares once digitisation speeds up," added the analyst.
During the bull run, the highly persuasive and entreprenurial Sameer Manchanda has been a darling of institutional investors when he was a key aide of Raghav Bahl. Manchanda helped TV18 raise hundreds of crores from investors by selling them attractive stories built around the TV18's initiatives covering broadcast, web and films. These haven't worked out so far. Investors have lost money heavily in TV18. When Den was launched, there was a belief that this company will not go the TV18 way because it would have a stable franchise like a utility. This hope too has soured - at least for now.