CSK share price has gone from 20Rs to 200Rs a 10X increase in barely 3 years. Have look at the share price graph here : Share price CSK

Lets take a look at what are the factors behind the terrific increase in CSK unlisted share price

1. Table of Contents

   Toggle

   Sponsorship Revenue:

Ravindra Jadeja led team has scored a century on the commercial pitch. CSK is now only a 2nd team to score 100 Crore plus in Sponsorships Revenues for a single season.

Last year, CSK earned Rs.59.62 Cr. from sponsorship revenue, which translates to a growth of approximately 70%

CSK has already signed 11 Sponsors on board & more than 12 other partnerships.

90% of the CSK Sponsors are extension of previous deals which clearly shows the kind of value Dhoni led unit brings to the table for the brands.

2. IPL Media Rights:

In 2017, Star India had won the broadcasting rights for IPL for Rs 16,348 crore for 5 years. This time, the BCCI is eyeing a windfall of Rs 50,000 crore through the media rights.

Right now, CSK’s top-line revenue is about Rs.200-300 Cr and if media rights sold for Rs.50000 Cr, then the top-line revenue can reach to Rs.500-600 Cr. (approx. 2X) and bottom-line revenue can go from an average Rs.80 Cr. to Rs.300 Cr in the next one year.

Disney Plus Hotstar is the only live streaming platform of the IPL in India. With the expansion of IPL from 60 to 74 matches after the inclusion of Gujarat and Lucknow franchises, there is likely to be a bidding war from its peers, which include Zee-Sony and Reliance Viacom 18.

We have written above IPL media right earlier here and here

3. 2^nd Most Valuable team in IPL

According to Forbes, the Mumbai-based franchise has a value of $1.3 billion closely followed by CSK, which are valued at $1.15 billion.

CSK’s rate will be approximately Rs.279.89/share at a valuation of $1.15 billion, but at the moment it is being trading at around Rs.210/share at a valuation of $862 million.

According to the valuation done by Forbes, the average worth of each franchise was $67 million, but with the league having recently expanded to ten clubs, that average is now up to $1.04 billion, an annualized growth rate of 24 per cent.

 

4. Valuation Compared to Other Franchisees:

Recently Lucknow Super Giants was acquired by Kolkata’s business tycoon at a whopping Rs.7090 Cr. and on the other hand CSK’s Market Capital is only around Rs. 6300 Cr. This shows that how much CSK is undervalued because:

• CSK has a higher brand value than Lucknow Super Giants as they are the most successful team in the IPL and Lucknow Super Giants is a new franchisee.
• CSK has won the greatest number of matches than any team in the IPL history, this shows that how consistent they are.

Also have a look at our views on CSK published in Economic Times here : ET – Altius

Interesting Nugget :

India Cements led by Mr. Srinivasan had bought the CSK franchise way back in 2008 for just $91 million. In the last 12 years, IPL teams specially, CSK has seen amazing traction both on and off field. This has actually led to massive jump in valuation for CSK. CSK’s valuation now stands higher than its earlier parent India Cements itself. This is how the valuation looks like :

India Cements : 5500 Crores

Chennai Super Kings : 6780 Crores

This goes to show what cricket and sports investments at the right stage can do for an investors portfolio. But Mr Srinivasan already new this and this is what he had quoted to IANS a couple of years back :

“Brand CSK will outgrow Brand India Cements. If you look at the history of franchise-based leagues in the US, it will outgrow everything. Passion for cricket is so much in India. The road between countries will see franchise-based leagues getting precedence as we go along,”

Add CSK to your investment portfolio here