NDTV shares on Monday zoomed to hit its upper circuit of 10 per cent after rumours started doing rounds that Adani Group is going to buy the company.
As of 1:19 PM on September 20, the share price of NDTV was hovering around Rs 79.85, up by Rs 7.25 or 9.99 per cent today, which is its upper circuit limit.
Since stock prices are mostly sentiment-driven, they fluctuate due to positive and negative news, a circuit filter is set up to ensure that there is no extreme price movement and investors are protected from any unwanted surprises. The filters also help limit price variation to a certain extent by stock operators.
The upper circuit limit is the highest price a stock can reach on a particular day. When this limit is touched, there will be only buyers and no sellers. Likewise, the lowest price that a stock can hit is the lower circuit limit and when a stock hits this limit, there will be only sellers and no buyers.
Rumours of NDTV being acquired by Adani Group
The inexplicable surge in the share price of NDTV could be attributed to the rumours that are flying around about its possible acquisition by the Adani Group, which had recently announced its entry into the media industry. However, OpIndia cannot independently verify the speculations.
“Buzz in Delhi: Adani Group going to buy an old TV Channel which always attacked him & signing will be in London-some say Rs.1600 cr total deal value. But the guy currently heading will only get around Rs.100 cr & saved from cases & major shareholder will take Rs.750cr,” tweeted journalist J Gopikrishnan.
Buzz in Delhi : Adani Group going to buy an old TV Channel which always attacked him&signing will be in London-some say Rs.1600 cr total deal value. But the guy currently heading will only get around Rs.100 cr & saved from cases & major shareholder will take Rs.750cr
— J Gopikrishnan (@jgopikrishnan70) September 18, 2021
Cc : @BDUTT https://t.co/DdQEp9fvms
According to Gopikrishnan, the speculations surrounding Adani’s entry into the media industry say that a deal worth Rs 1600 crore is finalised between the group and NDTV. As per the modalities of the deal, the current head of the company would get only Rs 100 crores and emancipation from various cases that plague the company. He further added that the major shareholders will get Rs 750 crores.
The Adani Enterprises had recently roped in veteran journalist Sanjay Pugalia as the CEO and editor-in-chief to lead the group’s media initiatives. Pugalia had earlier been associated with Quint Digital Media, CNBC-Awaaz, Star News, Zee News and was among the team that founded AajTak.
On his appointment, Adani Group released a statement: “We look forward to leveraging Sanjay’s wide-ranging experience in media, communications and branding across the Adani Group’s diverse range of businesses and in our Nation Building initiatives.”
NDTV has not had a stable financial performance. Its channels have consistently ranked among the lowest in terms of TRPs. The company’s promoters are also involved in investigations related to tax evasion. However, the company’s stocks have inexplicably performed well in last 24 months, with its stock rising about 130 per cent in the last one year.
But the recent spike in the stock price could be chalked up to the positive sentiments after rumours of the company’s buyout started doing the rounds on the internet. The investors perhaps believe that the acquisition could help rebrand the company and shake off its negative image among the viewers. The buyout could also relieve the company of the chronic tax liabilities it continues to face.
NDTV accused of tax fraud, financial irregularities
NDTV in recent times has been embroiled in controversies over alleged financial irregularities. NDTV is facing multiple cases related to violation of FDI norms, Income Tax violation, and non-compliance with disclosure norms. CBI is probing a case against NDTV in relation to a Rs 375 crore loan from ICICI Bank and a corresponding wrongful loss of Rs 46 crore to the bank.
There is a chain of borrow, repay and borrow where the Roys took a series of loans in 2008 as they sought to buy back a large chunk of NDTV shares from the market, allegedly violating foreign direct investment (FDI) rules in a 2007-09 investment, a charge denied by the company.
In August 2019, NDTV founders Prannoy Roy and his wife, Radhika Roy, were prevented from leaving the country after authorities had suspected that the accused Roys could run away from the country amidst massive tax fraud allegations against them.
More recently, in December 2020, Markets regulator Securities and Exchange Board of India (SEBI) had imposed a penalty of Rs 25 crore on news outlet NDTV and Rs 1 crore each on its promoters. SEBI had imposed fines on NDTV and its promoters Prannoy Roy and Radhika Roy for “violating various securities” norms by hiding information from shareholders regarding certain loan agreements.
