Balaji Telefilms: A rear mirror gaze - I - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Balaji Telefilms: A rear mirror gaze - I

Nov 22, 2007

Balaji Telefilms, one of India's leading content providers has had a dream run on the bourses recently. However, this is not without reason. With broadcasters making a beeline for launching new channels, especially in the general entertainment space, demand for content providers with a proven track record is on the rise. Balaji, by virtue of being the leading content provider in the industry is expected to derive the maximum benefit out of the current opportunity. Hence, we thought that it would not be a bad time to glance through the past annual reports of the company and check out for ourselves as to what makes the company such a force to reckon with in the content space. Thus, laid out below are the key takeaways from the company's FY04 annual report. Management discussion and analysis

  • This section in the report has a top-down analysis of the Indian entertainment industry and pegs the size of the Indian television content segment at Rs 25 bn, 20% of the total TV industry revenues and out of which Rs 5 bn is derived from international syndication (international content beamed on local channels).

  • Balaji's share as a percentage of total advertisement revenue of the mass entertainment segment declined from 57% in FY02 to 47% in FY03, primarily due to the cricket world cup, a one-off phenomenon that is expected to correct itself in FY05.The company was however insulated by the direct impact due to 82% of its content being commissioned (a fixed payment contract with TRP linked incentives) by the customer channels.

  • Fierce competition among channels expected to enhance Balaji's bargaining capacity, leading to stronger realisations.

  • Proportion of revenues from regional programming was 18% of sales, up from 14% in FY03

  • The company expects to enter children's programming, interactive shows, nature programming and youth programmes to diversify across genres

  • The company also expects to exploit its software library of more than 3,700 hrs through increased re-runs and sales in international markets with a significant Indian diaspora.

  • Also plans to make a foray into the film production business through the production of small budget films and leverage its already expensed production infrastructure and a resident insight into storytelling and production values, leading to low costs

  • The company believes CAS to be a key driver of its topline and bottomline growth as it will enable it to command a higher premium than prevailing benchmarks and exploit its existing software library more profitably

Financial Highlights:

  • The operating revenues declined 4% due to the decline in programming hours and the postponement of CAS. The operating margin declined marginally from 50.7% to 48.7% due to the increased contribution of sponsored programmes, which have a lower operating margin than commissioned programmes. PAT declined by 5% YoY.

  • The programming hours declined from 1,681 in FY03 to 1,485 in FY04 due to the withdrawal of a serial from Sony Entertainment Television in May 2003.

  • Balaji's programmes are either of the sponsored or commissioned variety. The number of programming hours as well as the revenue contribution from sponsored programming increased from 14% to 19% in FY04.

    Programming mix…
      FY03 FY04
    Sponsored (hrs) 614 667
    % of total hours 36% 45%
    % of total programming revenues 14% 19%
    Commissioned (hrs) 1,068 819
    % of total hours 64% 55%
    % of total programming revenues 86% 81%
    Total hours 1,681 1,486

  • In FY04 the proportion of revenues from regional programming was 18 % of sales, up from 14 % in FY03. The increase was on account of increased Kannada and Telugu programming. The company derived 82% of its revenues from Hindi programming. Besides this it had only a few customers namely Star Plus, Zee, Sony. Thus any increase in the share of regional entertainment in overall revenues or poor performance of the company's key customers would hurt the company adversely.

    Language mix…
    Revenues (Rs m) FY03 FY04
    Hindi 1,601 1,462
    % of total revenues 86% 82%
    Telugu 128 205
    % of total revenues 7% 12%
    Kannada 130 112
    % of total revenues 7% 6%
    Total revenues 1,859 1,779

  • Average realisations per hour increased 9% from 1.1 m to 1.2 m. The realisations per hour in case of commissioned programmes increased 18% from 1.5 m to 1.8 m. The high TRP's of the company's programmes helped in increasing the realisations per hour.

A look at the balance sheet

  • Balaji made an investment of Rs 90 m in production and post production equipment and studios. This helped the company in increasing its efficiency and reducing its operating costs.

  • The company does not have any debt and the surplus funds are invested in debt mutual funds.

  • The return on capital employed declined from 49% in FY03 to 35% in FY04 due to the increase in capital employed and a marginal decline in profits. The investments of the company increased from 487 m to 760 m as the profits generated after meeting the working capital and capex requirements and paying dividends are invested in debt mutual funds.

Equitymaster requests your view! Post a comment on "Balaji Telefilms: A rear mirror gaze - I". Click here!

  

More Views on News

BALAJI TELEFILMS 2020-21 Annual Report Analysis (Annual Result Update)

Oct 28, 2021 | Updated on Oct 28, 2021

Here's an analysis of the annual report of BALAJI TELEFILMS for 2020-21. It includes a full income statement, balance sheet and cash flow analysis of BALAJI TELEFILMS. Also includes updates on the valuation of BALAJI TELEFILMS.

What Fuelled the Sudden Surge in PVR and Inox Shares Today (Views On News)

Sep 27, 2021

Shares of both multiplex chain operators surged almost 18% to hit their 52-week highs.

8 Penny Stocks with Exceptionally High Promoter Holding (Views On News)

Sep 25, 2021

While high promoter holding is a good thing, there can be rare cases where penny stock promoters use misleading information about the actual valuation.

Shareholder Activism Triggers a 30% Rally in Zee Entertainment Shares (Views On News)

Sep 14, 2021

Zee Entertainment shares zoom after top investors seek CEO and MD Punit Goenka's removal.

Here's Why Affle India Hit 5% Upper Circuit Today (Views On News)

Jul 2, 2021

In the past one year, the company's share price is up 202%. Can it go higher?

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

India's Top 5 Monopoly Stocks to Watch Out for (Views On News)

Nov 30, 2021

These 5 companies dominate their sectors with a huge piece of the pie.

6 Penny Stocks that Rallied 1,000%+ in One Year (Views On News)

Dec 6, 2021

These penny stocks shed their penny status by surging 1,000% or more in the last one year.

The Biggest Winners and Losers in India's Transition to Electric Vehicles (Profit Hunter)

Nov 26, 2021

How India's EV transition could be a major headwind for the incumbents.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

BALAJI TELEFILMS SHARE PRICE


Dec 8, 2021 01:17 PM

TRACK BALAJI TELEFILMS

  • Track your investment in BALAJI TELEFILMS with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

MORE ON BALAJI TELEFILMS

BALAJI TELEFILMS - SAHARA INDIA MEDIA COMPARISON

COMPARE BALAJI TELEFILMS WITH

MARKET STATS