Tamil Nadu joins the VAT club
VAT, or the value-added tax as it is popularly known, is clearly gaining ground, with Tamil Nadu state government also deciding to implement the new taxation system in the state from the first day of the next year. VAT, which seeks to simplify the tax structure and create a uniform common market within the country, replaced the sales tax in India on January 4, 2005. It was adopted by all but three states though: Tamil Nadu, Pondicherry and Uttar Pradesh. Now even Tamil Nadu has jumped on the VAT bandwagon. The development calls for a relook at the new taxation system.
STOCK UPDATE
Television Eighteen India
Cluster: Emerging Star
Recommendation: Buy
Price target: Rs500
Relisting of TV18 India
Key points
- As per its ongoing restructuring process, TV18 India will list on December 27, 2006. Based on the valuations of the various properties within TV18 India and the new businesses ventured into post-restructuring, we have revised the price target for TV18 India to Rs500 per share (implied value of Rs700 in the market price of TV18 pre-restructuring).
- Network 18, the holding company of TV18 having a ~39% holding in Global Broadcast News (GBN), is expected to list later in January 2007. Our fair value for Network18 after the revision in TV18 India's price target works out to Rs290 per share (implied value of Rs348 in the market price of TV18 pre-restructuring).
- In due course, we also expect the initial public offering (IPO) of GBN in FY2007 and this, we believe, will unlock further value for both these companies.
- We continue to have a positive outlook on TV18 India, given the strength of its broadcast and Internet properties as also the ability of the management to monetise each of the businesses. We maintain our Buy recommendation on TV18 India with a revised price target of Rs500.