ETC Networks

Stock Beats Sensex In Returns Race With 127% This Year So Far Against Sensex's 65%

 

WITH advertising reviving for companies in media and entertainment business, a few companies are going for restructuring of their existing businesses. A case in point is Zee News. The company hived off all general entertainment channels to Zee Entertainment Enterprises. 

   Now, after Zee News, it is ETC Networks, another channel from the Zee Group, which is going for a restructuring. This news has gone well for the company's stock. The company's stock was 5% up on Monday to Rs 208.8. Since the beginning of this year, the stock has given around 127% returns, while the Sensex has given also 65% returns. So, the stock has been able to beat the Sensex by a fair margin in terms of returns. 

   The company is going to propose to its board of directors about its plans to restructure its broadcasting and education businesses. The company's education division is named Zee Interactive Learning Systems. The education division provides services such as pre-school education, film and vocational training education. As of FY09, of its total revenues of Rs 66 crore, broadcasting business contributed around Rs 41 crore, while the education business contributed just Rs 25 crore. So, the education business is still to become a big revenue stream for the company. However, the company plans to scale up the education business. 

   Its education division can be divided into three segments: pre-school, school and vocational. Its pre-school segment, known as Kidzee brand, has 480 schools under operation and a further 200 schools are slated to be brought under the Kidzee banner. The company has around 254 schools operational and its vocation training education, known as Zee Institute of Creative Arts and Zee Institute of Media Arts, has one institute at Bhubaneswar. It offers courses such as one-year and sixmonth diploma in animation, among others. 

   Going forward, the company plans to consolidate its pre-school business. Its Kidzee brand is already a hit and around 100,000 children have passed through Kidzee schools. In FY2009, more than 30,000 children enrolled in Kidzee. Hence, it is a sensible strategy on the part of the company to expand its pre-school business. Under restructuring, the company may hive off its education division. But it would take another three to four years for the education division to generate significant revenue streams. Its broadcasting business would continue to remain the key revenue driver.