Unlisted/Private Market - Investment Opportunity

Tuesday, Feb 20, 2024

ISIN

Face Value

Total shares

P/E of the share

INE852S01026

Rs. 0.10

        30,81,53,074

178.94

 

 

 

 

Market Capitalization

Industry

Book Value

P/B of the share

Rs. 5200 crores

Entertainment

            8.057

21.11

 

 

 

 

About Chennai Super Kings

  • Chennai Super Kings, an Indian Premier League (IPL) cricket franchise team headquartered in Chennai, Tamil Nadu, was established in 2008 and is a fully-owned subsidiary of India Cements. With four IPL championships under its record, a great brand value, and the highest winning rate, it is one of the most well-liked teams.
  • It had previously been operated as a strategic business unit of India Cements. India Cements transferred all of its shares in CSK to a shareholders' trust in 2018 and distributed one share of CSK for each share of India Cement held by its retail shareholders.
  • With a market worth of INR 7,600 crores, significantly surpassing that of its parent firm India Cements, the Chennai-based club became India's first sports unicorn after winning its fourth IPL title with a convincing victory over KKR (6,879 crores).
  • For the millions of CSK and Indian cricket fans, MS Dhoni and CSK are firmly linked and exclusive brands. Chennai Super Kings Business Model
  • The general public is able to invest in this only IPL team, which makes it unique among other IPL Teams. Due to its widespread adoration and popularity, the team makes money through collecting gate tickets, running advertisements inside the stadium, and selling souvenirs. Also includes Games Accessories, T shirts, Watches and other Merchandise.
  • The majority of the team's income comes from media rights, which account for about 70% of total revenue. Sponsorship revenue, which accounts for 15% to 20% of total revenue, is next, while ticket sales make up the smallest portion, approximately 10%, of total revenue.

Shareholding

The top shareholders list includes big names such as Indian Cements Shareholders Trust, Sri Saradha Logistics Private Limited, Life Insurance Corporation of India, ELM Park Fund Limited, Hirtle Callaghan Emerging Markets Portfolio, Reliance Capital Trustee Ltd, and Radhakishan S Damani.

Shareholder’s Name

Total Percentage of shares

 

(%)

 

 

Trustees, India Cements

30.86 %

 

 

Life Insurance Corporation

6.04 %

 

 

Sri Sarada Logistics Private Limited

5.69 %

 

 

Reliance Capital Trustee

2.31 %

 

 

Radhakishan S Damani

2.31 %

 

 

The Boston Company

1.68 %

 

 



Industry Outlook of IPL and Chennai Super Kings

  • Indian Premier League (IPL) media rights were recently sold for a staggering Rs 48,390 crore for a five-year term, according to BCCI, making it the second most valuable sporting league in the world.
  • It is simply a matter of time before the IPL grows even more with such a sharp increase in valuation. Following the addition of two additional teams, the Gujarat Titans (GT) and the Lucknow Super Giants, the number of games in the IPL 2022 increased from 60 to 74. (LSG).
  • By 2027 the number of games in IPL will increase to 94 matches. If the number of matches increases, companies bidding for media rights will get bigger. The broadcasting channels will get more time for advertising and their revenue will increase, which will benefit BCCI. There are even talks that IPL may be held 2 times in a year in upcoming future.
  • IPL witnessed a major milestone on 2021-22, for instance, television rights for the Indian subcontinent have been sold for Rs 23,575 crore to The Walt Disney Company India owned Star, while the digital rights have been bagged by Viacom18 for Rs 23,758 crore for 410 matches. So, an increase of almost 3x in the revenues for the next 5 years as compared to last 5 years’ rights income.
  • Each year BCCI and IPL franchises will earn Rs. 10,000 Crores(approx). 50% will be distributed among teams and 50% will go to BCCI.
  • Chennai Super Kings Limited, will be owning the Johannesburg franchise in South Africa's upcoming T20 League.
  • The franchise model has become popular in the majority of nations. Now, there is a 100-ball franchise league in England as well. Everything is moving into a T-20 format, so its owners are interested in investing in every franchise. This might increase its valuation in future.

Chennai Super Kings partners and Sponsors

  • Its principal Partners and premium tier of the franchise’s sponsorship portfolio are TVS Eurogrip, India Cements, Gulf, SNJ Distilleries - British Empire and SNJ 10000, Reliance Jio, Nippon Paint, Astral Pipes and Equitas Small Finance Bank.
  • Its official Partners and the second tier of the franchise’s sponsorship portfolio includes Dream11, Pouring Partners are Amul Kool, Digital Partners include Amazon Pay, Aqilliz and Radio Partners are Fever FM, Hello FM.
  • Its Merchandise Partners are Atlasware, Basicslife.com, boAt, Christy Textiles, Cover It Up, EUME, FanCraze, FanPlay IoT, Fully Filmy, ICICI Bank, Kaadoo Games, Levista Instant Coffee, NAC Jewellers, Nasher Miles, The Souled Store.





 Financial Highlights of Chennai Super Kings


(Rs in crores)




Particulars

Year ended

Year ended


31.03.2022

31.03.2021

Total Revenue

349.14

253.69

Profit / (Loss) before Interest, Depreciation & Exceptional

49.41

67.79

Items



Less : Finance Cost

5.67

5.26

Less: Depreciation / Amortization

2.40

3.33

Profit / (Loss) Before Tax

41.33

59.19

Less: Current Tax

11.02

17.63

Less: Deferred Tax

(181.68)

129.82

Profit / (Loss) After Tax

32.12

40.26


  • The expenses for the year under review have been higher consequent to the tournament being held in 2 stages and with the second stage being held overseas. The revenue was also higher due to the team winning the title.


  • On the revenue front, CSK’s income from the grant of central rights stood at Rs.242.27 crore as against Rs.185 crore, registering a 31% rise. The sponsorship income posted a 9% increase at Rs.65.02 crore as compared to Rs.59.62 crore while other tournament-related income was at Rs.33.74 crore as against Rs.3.20 crore.

 Some of its Achievements

 



  • Champions League Twenty20 (CLT) Title Winner: 2010 and 2014


  • The company is planning to create a high-performance centre on its land at Navallur for providing state-of-the-art training facilities to cricketers and sports persons.


  • The training facility will also have a sports complex and a cricket ground for Chennai Super Kings to have their pre-match practice sessions.


  • CSK had submitted a bid on July 13, 2022 to acquire a franchisee in the T20 domestic league conducted by Cricket South Africa and a license was granted for participating in the league in the city of Johannesburg. The first edition of the tournament is likely to take place in January and February 2023.


  • The company organizes Junior Super Kings inter-school T20 tournament every year in Chennai. They should look to broaden the horizon and organize such tournaments for other sports as well to encourage children as well as provide them a platform to showcase their talent which will also help in recognition of hidden talent in the country.


  • Another factor that has contributed to the making of ‘Brand CSK’ is its unique fan following and the franchise building the team around it’s growing band of followers. Also, the fact that the side has hardly changed its core group in the last decade.



  Investment Rationale

 


  • The price of the unlisted shares zoomed from Rs. 65/share in Jan ‘21 to Rs. 169/share as on March 2023, reporting more than 100% growth. With cricket gaining popularity across the globe, IPL is gaining traction as well which may increase the brand value of IPL and its teams by multifold. This along with CSK’s popularity, we can expect more upside to the share price and higher valuations which could make CSK worth billions.


  • With its strong brand value and popularity, CSK has managed to sail through the tough waters during the pandemic by maintaining positive broadcasting and other indirect revenue streams. CSK is estimated to continue generating strong revenues from merchandise sales, sponsorships, portions of prize money and digital viewership revenues for FY21-22.


  • Recently TVS Eurogrip India’s leading two and three-wheeler time tire brand became the principal sponsor of the Chennai Super Kings the deal was signed for a record Hundred crore rupees for a period of three years.


  • If team performs well, their rating and brand value increases, which ultimately increases the valuation or per share value of the team. And, if CSK wins an IPL, that will add more value to the CSK Share Price.


  • Radhakrishan S Damani has a 2.94 % shareholding in CSK, he is in talks to increase his stake in CSK Cricket Ltd.


  • Since its inception in 2008, the brand IPL has grown 318 percent in value, from around USD 2 billion to over USD 8 billion this year.


  • The IPL now stands at a valuation of USD 10.9 billion. The company is now a decacorn. The total number of teams in IPL is 10. If 10 billion is divided into 10 (roughly). Each team is worth USD 1 billion.

 


Market Capitalization

 


Price Per share – Rs.170


Total Outstanding shares - 30,81,53,074


Market Capitalization – Rs. 170 * 30,81,53,074 shares = Rs. 5238,60,22,580 (Rs. 5200 crores approx)


Face Value = Rs. 0.10

 



Investor Relation’s Link

 




Disclaimer



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