Business of the Company
K Sera Sera operates in the media and entertainment sector which currently
stands at $4.5b USD and is expected to grow at double digits at 18% CAGR
over the next five years and grow to over $10 billion USD by 2009. The largest
contributor would be the television segment and second would be the film segment.
(Source: FICCI PwC Report on The Indian Entertainment Industry: An Unfolding
Opportunity – March 2005).
K Sera Sera is mainly in the business of producing movies and has now entered into television content as well. Some of the movies released by K Sera Sera under various banners are Darna Mana Hai, Ek Hasina Thi, Ab Tak Chappan, Gayab, Vaastu Shastra, Naach, Sarkar, My Wife's Murder and James.
Currently the movies under pre production are Ek, Barsaat, Nimmi and one more unnamed movie.
The television serials produced so far are Kuch Love Kuch Masti and Aao Bahan Chugli Karen.
The key thing to remember here is that Ram Gopal Varma will play a critical role in shaping up the future of the company. The key to success is quite straightforward – make hit movies and bring in the cash. Ram Gopal Varma will be a key player in the future of the company as a lot will depend on his skills as a director and to that extent as of now it seems likely that the future of the company will closely mirror that of Ram Gopal Varma.
The agreement with Ram Gopal Varma is such that K Sera Sera and Ram Gopal Varma will co produce and / or jointly produce movies till 2-Feb-2009.
Financials
K Sera Sera has only started making revenues since the last three years and the revenues last year were Rs.375.13 million and the net profit after tax was Rs. 22.59 million and the EPS last fiscal has been Rs.1.51 while the NAV is Rs.26.
Object of the Issue
Money is being raised from the IPO to set up an office which is expected to cost Rs.45 million, fund distribution activity which will cost Rs.30 million and fund movie production which is estimated at Rs.230 million.
Key Risks
There are various litigation cases pending against the company and the personnel of the company.
K Sera Sera is largely dependent on movie releases for its revenue and as such because of the nature of the business the revenue cannot be predicted with any certainty.
Conclusion
Since the company has recently started generating revenues it will be difficult to estimate what is the fair price that an investor should be willing to pay for the company. Add to this the market is at an all time high and so the pricing is expected to be aggressive. A decision cannot be taken without knowing the price of the IPO (which is not yet out) but it can be said that this investment is not for everyone and only people with a high appetite for risk should look into it even when the price is out. Others who will not be able to handle the expected volatility in earning may end up burning their fingers in this stock.
The following table shows the upcoming IPOs that have been covered under this section and their status. You can click on any of these to read more about them.
The following table lists stocks from the same industry which are covered in this section. You can click on any of them and read more about it.
Entertainment
