Religare positive on media buy on Balaji UTV

Religare Securities has a positive outlook on the media and entertainment industry, which is expected to witness continued momentum across segments.

Apart from the established areas like television, film and print media, Religare expects animation, gaming, OOH (out-of-home) and online advertising, and radio to throw open tremendous opportunities for growth.

Advances in technology and the advent of new distribution platforms would be key growth factors, the brokerage says.

According to a FICCI-PwC report released at the ninth FICCI Frames Forum, “The Indian entertainment and media industry, whose size was pegged at Rs 51,300 crore in 2007, is estimated to grow at a compound annual growth rate of 18 per cent for the next five years, to Rs 1.157 trillion in 2012.”

Television

This sector is projected to grow at 22 per cent CAGR over the next five years, from Rs 22,600 crore in 2007 to Rs 60,000 crore in 2012. Revenue contribution from distribution, advertising and content would amount to 63 per cent, 33 per cent and 3 per cent respectively by the end of 2012.

Television contributes a bulk of entertainment and media revenues, at 44 per cent in 2007. It is expected to account for an even higher share of overall revenues, at 51.8 per cent, by 2012, according to the FICCI-PwC report.

Religare has picked Balaji Telefilms and UTV as their top picks in this segment. The brokerage has rated ‘buy’ on these stocks with a target price of Rs 375 and 892 respectively.

Films

The films business is becoming increasingly de-risked due to the emergence of various revenue streams, including television, home video, movie merchandise, internet and re-make rights.

The industry is expected to witness 13 per cent CAGR to Rs 17,550 crore by 2012. Despite nearly doubling in size, the contribution of films to revenues of the media and entertainment industry will dip from 18.7 per cent to 15.2 per cent.

The domestic box office segment will continue to contribute the largest revenues, logging 11 per cent CAGR in the next five years to Rs 12,250 crore on the back of higher ticket prices as well as higher occupancies. Overseas box office revenue is expected to grow at a 19 per cent CAGR over 2007-12 from Rs 850 crore to Rs 2000 crore and the home video market is poised to grow at 15 per cent CAGR to Rs 1,500 crore, doubling from its current size, the report says.

Religare has rated Cinemax a ‘buy’ for a target price of Rs 183. It has also put ‘buy’ on Fame India, PVR and Inox Leisure for target prices of Rs 105, Rs 416 and Rs 170 respectively.

http://economictimes.indiatimes.com/

Business Financial Services

Religare positive on media buy on Balaji UTV