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Industry Overview:
The Indian Entertainment and Media Industry have out-performed the Indian economy and is one of the
fastest growing sectors in India. It is rising with the economic growth and rising income levels that India has
been experiencing in the past years.
According to FICCI-PWC report on “Media & Entertainment- 2008” it recorded a growth of 17% in 2007 over
previous year.
Industry size estimated Rs. 51,300 Crore in 2007, up from Rs. 43,800 Crore in 2006.
Advertising industry recorded a growth of 22% in 2007 over 2006 to reach Rs. 19,600 Crore in 2007,
up from Rs. 16,100 Crore in 2006; contributed 38% of the industry’s revenues.
Indian E&M Industry projected to grow by 18% cumulatively over the next five years; projected to
reach Rs. 1,15,700 Crore by 2012.
Foreign investments in the E&M industry reached a record high of US $211 million.
The industry saw the entry of new players and existing players expanding by diversifying into new segments,
spreading their presence across value chains, broadening their horizons by increasing their geographic
presence.
The advertising industry is experiencing a paradigm shift with digital platforms enabling to reach the critical
mass. This had resulted in consumers shifting from passive mediums to spending more time on digitally
interactive mediums. Internet and mobile are two keys enablers for the same. Internet advertising is
estimated at Rs 420 Crore in 2008 growing at 32% CAGR, expected to touch Rs 1100 Crore in 2012.
Segmental Outlook:
Television Industry:
The television industry in India is currently at its best. It has
contributing the largest share in the Indian E&M industry in
Projected Market Size - Television
the last few years.
55000
Current size: Rs. 22,600 Crore; Projected size in 2012:
Rs. 60,000 Crore Growth in 2007 over 2006: 18%; CAGR 45000
2008-2012: 22%.
Rs Cr
35000
Television industry is transforming with digitalization of 25000
distribution networks through increase in DTH
subscribers which projected to grow at 44% CAGR 15000
over the next five years. 06 07 08 E 08 E 10 E 11 E
CAS was made mandatory from January 1, 2007, but
saw lukewarm response during the year.
Print/Animation/Gaming Industry:
Segments like print media, animation and gaming are also
Projected Market Size - Print Media likely to see interesting growth rates. According to
NASSCOM, the Indian gaming market is likely to grow 72 per
22000 cent from US$ 48.51 million in 2006 to US$ 429.54 million in
19000
2010. Similarly, the Indian animation services industry is likely
to grow at a CAGR of 25 per cent from US$ 354 million in
Rs Cr
Film Industry:
The Indian film industry, with over 300 Crore admissions
per annum, is the largest in the world, in terms of number Projected Market Size - Film Industry
of films produced per year. This industry, which was worth
US$ 2.12 billion in 2006, is estimated to grow at a CAGR 17000
of 13 per cent to US$ 4.42 billion by 2011.
14000
One perceptible change has been the rapid growth of
Rs Cr
multiplexes, which meets consumer demand for quality 11000
entertainment and has also helped boost production of
8000
niche films targeted at niche audiences.
Current size: Rs. 9,600 Crore; Projected size in 2012: Rs. 5000
17,600 Crore 06 07 08 E 08 E 10 E 11 E
Growth in 2007 over 2006: 14%; CAGR 2008-12: 13%
Radio Industry:
1200
950 Current size: Rs. 620 Crore; Projected size in 2012: Rs.
700
1800 Crore
450
Growth in 2007 over 2006: 24%; CAGR 2008-12: 24%
200
06 07 08 E 08 E 10 E 11 E
Conclusion:
March 08 is the best quarter for the media industry with the union budget being the key revenue driver. We
expect media companies to register a 45.6% year-on-year (y-o-y) growth in revenues with TV18 and Zee
News putting up a strong show. However the net profit growth on an overall basis is expected to be 28.4%
with Zee News outperforming its peers. Consequently, other major companies like PVR, Deccan Chronical,
HT Media yet to announce there results, which are expected to be positive. Other entertainment content
areas like music and television also have a huge potential international market.
Among the entertainment pack we found that fundamentally PVR, Deccan Chronicle, Balaji Telifilms
and HT Media are at attractive level to accumulate on decline. These scripts are good investments for
long term perspective. The business model of these companies is unique and banking on huge
potential of media industry one can invest in these stocks.
Page 2
BMA Research Desk Indian Media & Entertainment Industry
Shareholding Pattern Joint venture: The Company had formed a joint venture company with
Group M (a WPP company) to explore and create a market in the Sport and
Promoter 60.88% Event Management space through its wholly owned subsidiary Sieger
Foreign 20.38% Solution Ltd.
Institutions 13.14%
Public & Others 5.60% Revenue likely to go up: it has increases its advertising revenue by 30%
with its immediate effect from last month. Revenue from new English daily
Relative Performance is also expected although the print market is crowdie.
195
Strong fundamental: Turnover ratios like fixed assets turnover, Inventory
turnover are well and above than industry average and better than other
155
peer companies. Operating margin is very high and ROCE and RONW are
% Chg
08
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Financial Highlights:
Page 3
BMA Research Desk Indian Media & Entertainment Industry
08
Strong performance: Add the latest initiative, which is the film production
07
08
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initiative, which is kicked off very well with Taare Zameen Par being doing
Se
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PVR Sensex very well. The food court initiative along with the Amit Burman, a very
interesting business mix evolving. Operating margins to the north of 25%
with return on capital employed on an individual project basis around 25%
and just 12-times one-year forward earnings with a 60% top line visibility for
the next two-years.
Financial Highlights:
200
to hit in next few months.
100
JV with Star Group will pay in the future: Most recently company has
0 entered into a Joint venture (51% Star and 49% Balaji) with Star Group to
create a bouquet of regional language general entertainment channels,
07
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Balaji Sensex responsible for operations of the channels, where as Balaji will produce
regional language shows exclusively for the venture. We expect the venture
will perform well in the future as both the parties have rich experience in
their respective areas.
Financial Highlights:
Rs Cr 200703 200803E 200903E 201003E 201103E
Sales 317.47 327.45 392.94 471.53 565.83
growth(%) 13.23 3.14 20 21.2 15.25
PAT 80.63 88.67 113.06 136.54 181.86
Analyst growth(%) 33.68 9.97 27.52 20.76 33.2
Debjit Adak, debjit.adak@bmastock.com EPS (Rs) 11.69 12.87 16.41 19.82 26.4
Chandan Ghosh, research@bmastock.com
OPM(%) 40.63 43.88 46 46 51
RONW(%) 28.64 21.63 22.6 22.4 24.09
Page 5
BMA Research Desk Indian Media & Entertainment Industry
network site www.desimatri.com has been doing well and company has
110
planned to launch other site in matrimonial, real estate and auto verticals.
60 Fever FM, the radio JV with Virgin has been successfully running in Delhi,
Kolkata, Mumbai and Bangalore and will be extending its footprint in other
07
08
07
07
cities also.
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HT Media Sensex
Strong Fundamentals: Low Debt Company having enough growth
potentials. High turnover ratio and high return on net worth give strong
massage to its shareholders. Looking at strong last three quarter and
attractive industry position one can invest for 1 yr down the line. Its e-
business, radio businesses are also in growing phase.
Financial Highlights:
Rs Cr 200703 200803E 200903E 201003E 201103E
sales 1039.3 1320.46 1716.6 2231.58 2901.05
growth(%) 26.17 27.05 30 28.45 25.67
Analyst PAT 118.71 219.74 273.09 360.74 475.72
Debjit Adak, debjit.adak@bmastock.com growth(%) 208.72 85.11 24.28 32.1 31.88
Chandan Ghosh, research@bmastock.com EPS 4.95 10.06 12.5 16.51 21.77
OPM(%) 22.18 29.2 27.71 27.71 27.71
RONW(%) 15.15 22.9 23.18 24.6 25.75
Page 6
Valuation Using DCF Method:
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Valuation Using DCF Method:
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