With corporate-themed films on the rise, it seems Bollywood loves the stock market. But does the market love Bollywood? It would seem no. While Bollywood is mounting collections week after week with new releases, the listed companies in the business of film production do not seem to be reflecting that in their share price movements.
The answer could lie not only in the general downturn in the country’s stock markets in line with global trends, but more in the very nature of the risky business of movie productions – collections are uneven, as it is difficult to predict blockbusters that can bring back the capital several times over from the losers that bleed money.
“A company might produce three hits in a year but not a single one the next year. It is a highly risky business,” said Arpit Agarwal, head of research at Arihant Capital. “It’s a tough call to predict the earnings and profitability.”The listed companies in the business have plunged into the stock market as their one-year returns lags the benchmark 30-stock Sensex by a huge margin.
The exception is UTV Motion Pictures, which has given hits like Rang De Basanti, Life In A Metro, Jodhaa Akbar and the international film The Namesake, and Adlabs Films which produced Singh Is Kinng and Namaste London has been battered despite hits because of concerns over its exhibition business.
UTV, aided by a key stake deal with global entertainment giant Walt Disney and also interests in computer gaming, has gained about 31 per cent over the year, while the Sensex has dipped by 15 per cent.
Film production is still a very unorganized business in India. With the entry of UTV, Zee Entertainment, Adlabs Films, Sahara Motion Pictures, Pritish Nandy Communications and Balaji Telefilms, some sort of organized corporatisation is getting into the business.
“Film making is a profitable business and especially UTV is a prominent player that has done well in film production. More corporatisation will bring in better access of funds and that will be one of the best things for the industry,” said Pankaj Pandey, head of research at ICICI Securities.
Companies having diversified interests in the exhibition business have suffered as a result of the low viewerships in the big halls in the first half of the year. “The occupancies went below 30 per cent and that becomes critical,” said Pandey.