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Swimming against the tide: performance of the entertainment companies
Enkayaar, Bollywood Trade News Network
With the economy flourishing and the interest amongst the investors on a quarterly basis about the worm of the sensex, its performance during the last quarter i.e. December 2007 has been depressing when it is compared with December 2006 quarter. Of the registered 3650 companies 2203 companies have already declared the results, more than 90% of these companies have registered a decline in their profits. But this is not the story, the story is that the entertainment companies, which have been listed on the stock market, have registered voluminous growth and have registered handsome profits.
The latest success that has been achieved has been that by PVR Films which entered into the business of film making with TAARE ZAMIN PAR and seems to have stuck a goldmine as illustrated from the results and the film has gained further momentum after it has been provided with a tax break. With this maiden debut PVR films has delivered maximum profits and its market capitalization has reached nearly 700 crores. Buoyed by the success of TAARE ZAMIN PAR PVR is planning to foot map whole of the country with more than 250 theatres within a year.
The stars of this pack however has been Adlabs which has in its kitty biggest hit of the 2007, NAMASTE LONDON and one of the most unconventional and noire film JOHNY GADDAR. No wonder, the stocks of Adlabs which just two years ago was going at Rs. 200/- has zoomed to 1400 and its market capitalization is now more than 6000 crores, which is more than all the companies put together i.e. UTV Software, Cinemax, Inox Leisure, Pyramid Saimara, Ashtvinayak films etc. The only company which has stumbled on alter has been Saregama but it is also a pointer to the fact that music as a genre, more so a music which has to be purchased to be listened to has started its journey down the hill. This is also an indicator that with free music bombarding the cyber world strategy needs to be realigned if the profit making has to be sustained.
As per the estimates of Price Water House Cooper and FICCI the size of Indian entertainment industry was around 8500 crore in 2006, and if one were to have a conservative estimate then it would now be around Rs.10000 crore, and of this if Adlabs is having a capitalization of more than 6000 crore then it indeed has emerged as one of the silent giants of the industry. For this Adlabs must have to thank the investors who have reposed there confidence in Adlabs.
The way the stocks have performed has also more to do to with the fact that now entertainment / cinema viewing has become an all-encompassing business in which food courts have a major role to play. As a matter of fact food courts contribute to around 30% of the business and the synergy that has been attained by including food courts has been an evolution in sync with what is happening in Hollywood.
In 2008 one could see UTV Software emerging as another gem from the entertainment bouquet in the country, as it has JODHAA AKBAR in line for release and has a RANG DE BASANTI as a past performance in its kitty.
Who would have thought that entertainment stocks would be one of the blue chips, but this is how the cookies have crumbled and with the business of multiplexes planning to expand to last frontiers of the country the shareholders and the companies would be laughing all the way to the Bank.