Den Networks, Hathway Cable freeze at 10% upper circuit post Q1 results

Shares of Den Networks and Hathway Cable & Datacom were locked in their 10 per cent upper circuit bands on the BSE at Rs 109.60, and Rs 52.70, respectively, on Tuesday after reporting a strong set of numbers for the quarter ended June 2020 (Q1FY21). These stocks also hit their respective 52-week highs on the BSE.

Mukesh Ambani controlled – Reliance Industries (RIL) hold a majority stake in Den Networks and Hathway Cable and Datacom through group companies.

In Q1FY21, Den Networks consolidated net profit jumped an over four-fold at Rs 58 crore, on the back of strong operational performance by cable business. The company had a profit of Rs 14 crore in Q1FY20.

Consolidated Ebitda ((earnings before interest, taxes, depreciation, and amortisation) margin expanded by 800 basis points (bps) to 21 per cent from 13 per cent in the previous year quarter. Revenues during the quarter under review, however, declined 4 per cent to Rs 301 crore against Rs 313 crore in the year-ago quarter.

Hathway Cable and Datacom has reported a consolidated net profit of Rs 66 crore in Q1FY21, against a net loss of Rs 9 crore in Q1FY20. Operational income declined 7 per cent to Rs 420 crore from Rs 450 crore in the corresponding quarter of previous fiscal.

In February 2020, RIL had announced a consolidation of its media and distribution businesses spread across multiple entities into Network18. Under the scheme of arrangement, TV18 Broadcast, Hathway Cable & Datacom, and Den Networks will merge into Network18 Media & Investments.

The broadcasting business will be housed in Network18 and the cable and ISP businesses in two separate wholly-owned subsidiaries of Network18.

The restructuring shall create value-chain integration, and render substantial economies of scale. The Scheme shall also simplify the corporate structure of the group by reducing the number of listed entities, the company said.

Investors will get 92 shares of Network18 for every 100 shares of TV18 Broadcast, 78 shares of Network18 for every 100 shares of Hathway Cable, 191 shares of Network18 for every 100 shares of Den Networks.

Reliance’s holding in Network18 will reduce from 75 per cent to around 64 per cent upon implementation of the Scheme. The scheme of arrangement is subject to all necessary approvals.

The stock of Network18 Media & Investments was locked in 5 per cent upper circuit at Rs 47.70, while TV18 Broadcast was up 5 per cent at Rs 39.20, after hitting an intra-day high of Rs 40.65 on the BSE. In comparison, the S&P BSE Sensex was up 1.4 per cent at 37,952 points at 02:42 pm.

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