Chennai Super Kings Cricket Limited (CSK)

Company Overview :  Chennai Super Kings Cricket Limited was incorporated on 19th December, 2014 and is a subsidiary brand of India Cements. This company is quiet popular in India as it known for its cricket team, the Chennai Super Kings. The team was founded in 2008 and is based in Chennai, Tamil Nadu. They play in the domestic cricket league called the Indian Premier League. The home matches are played at the M.A Chidambaram. They have the highest winning percentage from among the rest of the teams and have already won four times since 2010.

Chennai Super Kings (CSK) is a franchise cricket team based in Chennai, Tamilnadu, India. They play in the Indian Premier League (IPL), the team plays its home matches at the M.A Chidambaram Stadium in Chennai. The team is owned by Chennai Super Kings Cricket Ltd and India Cement is the major stakeholder. The team served a two-year suspension from the IPL. The Super Kings have won the IPL title four times (in 2010, 2011, 2018, and 2021), and have the highest win percentage of matches among all teams in the IPL (58.98%). They hold the records of most appearances in the playoffs (eleven) and the Final (nine) of the IPL.

The company owns and manages the cricket team Chennai Super Kings, which has recently become the first unicorn in sports industry in the country i.e. company having a valuation of more than US $1.2 bn. This highlights the massive growth that the company has achieved post winning their IPL trophy in 2021 and has made them the most valuable and high growth franchise in the Indian Premier League. The company has a CAGR of 158% in 2022 over 2020 in terms of its revenue from operations, which is a great increase considering that the IPL in 2020 was cancelled due to the widespread pandemic across the country. The company has been able to increase its revenue despite the various unfavourable conditions, which exemplifies their operational efficiency. The team Chennai Super Kings have won the IPL four times, which places them second in the number of IPL trophies despite not participating in 2016 and 2017. The team has the maximum win percentage of 61.83% among all teams in IPL, which can also be attributable to the great managerial efficiency that their board possesses. The company also organises Junior Super Kings inter-school T20 tournament every year in Chennai 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.

Revenue Stream:

• Brand Sponsorship:

IPL franchises generate a sizable part of their revenue through brand sponsorships. Franchises tie-up with brands to offer visibility to the brand by endorsing their logos on their jerseys, headgear and team kits. Bigger the logo, the more the money brand has to shell out. Teams also earn from other tournament-related marketing activities organised by their sponsors. Sponsorship revenue reportedly forms around 20-30% of revenue for an IPL team.

• Ticket Sales:

The global pandemic affected India’s biggest sporting gala in 2020 and 2021. However, it was back with a bang this year. Now that the stadiums are full of spectators again, a small portion of ticket sales will be offered to sponsors and the BCCI, the rest goes into the team’s wallet. The ticket prices are determined based on the seating capacity of the stadium, the excitement around the event, the standard of living in the city, and so on. Ticket revenue reportedly forms around 10% of revenue for IPL teams.

• Prize Money:

BCCI offers a colossal amount of prize money to the winning team. This amount varies every year.

• Merchandise Sales:

As per a ResearchAndMarkets report, India’s sports equipment and apparel market is estimated to be $28 billion in 2022 and reach $40.6 billion by 2027. Each franchise sells merchandise that includes T-shirts, Caps, Wrist watches and so on and gets a share of money collected from consumers.

• Media Rights:

The official media sponsor of the IPL for the last decade was Sony India, vivo and then it was Dream 11. Disney+Hotstar is declared as the official broadcaster of IPL 2022, which has further onboarded 13 new sponsors including Swiggy, Pristyn Care, Ather Energy, Parle Agro, Livspace, Niyo, Zepo, Niyo, Spotify, L’Oreal, Spinny, ahead of the cricketing extravaganza. IPL is known for its revenue distribution model. The BCCI gets a substantial amount from broadcasters and online streamers. On the basis of IPL team ranking, this amount is distributed among all IPL teams after deducting their fees. Media rights are another way of earning for IPL franchises. In fact, they are the IPL brand’s biggest financial contributors.

• Sponsorship Income:

From players bat to the bails on the stamps everything within the stadium has a price tag. The sponsors are the real source of income in the Indian Premium League. All the teams of IPL have sponsors for everything, there is the main sponsor, a jersey sponsor, and even a sleeve sponsor, which hugely contributes to the overall income. The teams tie-up with organizations to promote brands in return for an exorbitant amount of money.

Key Strength:

• Strong growth rate has been observed
• Lack of Peer Competitor
• Strong Brand Value
• Increasing CAGR value
• Team CSK is driven under the strong Captainship of M.S Dhoni.

Valuation:

• The company had a massive increase in revenue in 2022. The revenue of company has grown by 37.4% in FY22.
• The company’s book value per share has increased in FY22 over FY’21 due to increase in the total equity of the company. The increase in equity is attributable to the increase in reserves and surplus.
• Cash flow from operations has been decreased by 51.2% in FY22.
• Cash flow from investing is increased by 300% in FY22 over FY21.
• Current asset of company is increased by 32% in FY22 over FY21 on the other hand current liability is also increased due to increase in trade payables.