CSK market cap pegged at Rs 2465 crore

The premium can be justified by the brand value of CSK, the report said. The company's shareholding is very dynamic and has a big grey market for its equity, making it one of the stand outs of the private sector, Altius Investech said.

Sandip Ginodia, CEO, Altius Investech said, "CSK started to trade in Jan 2019 at Rs 12 now it's 75/80 with 30 crore outstanding shares market cap comes  to Rs  2400/2500 crore. With IPL in fray now and auction of two new teams, the scrip is likely to touch 3 figures soon".

As per the report, India Cements owned Chennai Super Kings doesn't classify any shareholder as a promoter. It is the largest shareholder with a 30.08 per cent stake in the company. The other entities holding more than 5 per cent stake are Sri Saradha Logistics Private Limited at 6.88 per cent and LIC at 6.04 per cent.

The company has no secured loans or charges on any existing assets, and a 28.6% return on equity, making it an extremely sound investment opportunity, the note said.

Most acquisitions of sports teams are not merely based on cash flows and numbers but rather are based on the brand value as the acquirer pays for the brand.

The report said the valuation for the teams are increasing by every edition. Moreover, the new media rights tender is due, it will further enhance the valuation for teams. The expected cost of one franchise will be at least Rs 1500 crore, the report said.

"While there's no doubting that a small bidding war will take place between the parties showing interest in owning IPL franchises, the final cost could soar up keeping in mind the rising popularity and brand valuations of the IPL teams," the report said.

Chennai Super Kings Limited is an unlisted public company incorporated on 19th December 2014. Its registered office is in Chennai, TN and paid up capital is Rs 3.08 crore.

The company owns and operates the cricket team and sales of its merchandise. It is a cricket team in the Indian Premier League(IPL).

Its estimated brand value was 732 crores in the year 2019. It was founded in 2008 when the IPL tournament started in India.

The drop in the total revenue and profit for the year 2019 - 20 compared with the previous year was mainly on account of reduction of income from grant of central rights from Board of Control for Cricket in India (BCCI).

The report said the simultaneous 24% increase in sponsorship income is an indication of the growth and flourishing image of the cricket team.

Accordingly, the PAT has also gone down from Rs 110 crores to Rs 50 crore. The company also saw almost 11% increase in expenses in the year 2019-2020 as compared to the previous year. CSK also contributed Rs 20 crore to Electoral Bonds. The increase in expenditure, paired with the lower grant has been the driver of lower net profit.

Since the IPL tournament did not take place in the year 2020 due to the Covid outbreak, CSK's revenue streams were affected. The equity, face value and debt of the company has remained same, however a 40% increase in Net Worth was observed on account of substantial increase in tangible assets of the company.

As per the report, according to the 2019 IPL brand valuation conducted by Duff & Phelps, the CSK brand was valued at Rs 732 crore, only second to the Mumbai Indians brand, which was valued at Rs 809 crore. Kolkata Knight Riders was valued at Rs 629 crore. As per it, the value of the entire IPL brand was more than Rs 48,000 crore. On the number of championships won too, CSK is second only to Mumbai Indians.

Globally, investors own several soccer and basketball teams. English football club Manchester United has a market cap of $3.12 billion, while Italian champions Juventus is trading at a valuation of $1.77 billion. Two other Italian football clubs, AS Roma and Lazio, have market caps of $490 million and $120 million, respectively, the report said.