Ad spend to grow by 12-15% soon; Zee Telefilms to benefit

Pradeep Rane
22 September 2003

Mumbai: After three years of negative growth, it is expected that ad spend will grow by 12 per cent to 15 per cent over the next few years.

Analysts are expecting that the recession in the ad spend will halt as the economy picks up steam. Says an ABN-Amro Asia Equities (India) report: "Our discussions with various companies in the infrastructure sector indicate that the pick-up in economic activity is quite strong."

It reports said that almost all engineering companies see clear visibility of strong economic growth for the next three years at least. Should this happen, these companies will be the early beneficiaries.

The current low interest rate environment is driving consumer demand. Car sales are soaring as finance is easily available and affordable (consumers are availing of the discounts offered by various finance companies). Excellent monsoons this year should propel rural consumption, and hence demand.

"All this, coupled with rising business confidence, make us confident about strong GDP [gross domestic product] growth from this year, signalling increased ad spend," ABN Amro Securities said. This will lead to more ad spend by companies.

It also said that Zee Telefilms will be a prime beneficiary of this development. "While the market is pressuring the Zee stock given the lack of visibility on the implementation of CAS [conditional access system], we are optimistic about the company."