Investor interest in unlisted shares of Indian Premier League (IPL) franchise Chennai Super Kings (CSK) has pushed up its price 25 percent year-on-year (YoY) to Rs 200-205 per share compared to Rs 160-165 per share in 2021. CSK’s valuation has now reached Rs 6,300 crore, The Economic Times reported.
CSK attracted investors due to growing revenue from sponsorships, royalties and merchandise and a comparatively “cheaper” price-earnings ratio against other global sports franchises, experts told the paper.
Another reason for the upswing is demand seen for the newly inducted Gujarat and Lucknow franchises which were bought at for way higher than the base price of Rs 2,000 crore each, for a steep Rs 5,625 crore and Rs 7,000 crore, the report said.
CSK is estimated to have 308 million unlisted shares of which 5-7 percent trade regularly leading to more secondary market transactions for them, it noted. Avenue Supermarts’ Radhakishan Damani is a key shareholders of CSK.
Rahul Thalia, Director of Sarffin Financial Advisors, said CSK is showing “strong uptrend” ahead of the upcoming IPL season and profits are expected to soar once auctions for media rights of the tournament are finalised.
Investors are lapping up shares now in hopes of a potential initial public offering later, noting that there is no other Indian sports franchise team available for trade.
Tushar Bopche, who co-founded financial markets startup incubator BrainStation India, felt that interest in sports and online gaming has increased due to the work-from-home culture amid the COVID-19 pandemic which, in turn, has benefitted CSK.
CSK has the highest win percentage in the IPL at 59.83 percent and has won four tournament titles in 2010, 2011, 2018 and 2021. The team also holds record for most appearances during the IPL playoffs (top 11) and finals (top 9).
Kotak Mahindra AMC had earlier this month invited bids for one lakh CSK shares which will be valid for 30 days from the February 14 bid closure date.
The AMC landed the CSK shares when it was demerged from India Cements and decided to explore the bidding route to offload the shares as the franchise is still unlisted.
In April 2021, unlisted shares of the team traded at Rs 75-80 each with market cap of Rs 2,500 crore, while the 14th IPL tournament was underway.
CSK reported a profit of Rs 40.26 crore for the year ended March 2021, down from Rs 50.33 crore in 2019-20. It reported a revenue of Rs 253.69 crore for the year ended March 2021, down from Rs 356.53 crore in the preceding year.
CSK was carved out of India Cements, which is the shareholder and trustee of the franchise, in 2015. This was done after the match-fixing scandal that year which led to CSK being banned from participating in the subsequent IPL edition.
In FY20, India Cements held over 30 percent stake in CSK. The unlisted shares were released in 2018 amid the corruption and betting charges placed against it.