Inspire Films coming with IPO to raise Rs 21.23 crore

Inspire Films

• Inspire Films is coming out with an initial public offering (IPO) of 35,98,000 shares of Rs 10 each in a price band Rs 56-59 per equity share. 
• The issue will open for subscription on September 25, 2023 and will close on September 27, 2023.
• The shares will be listed on NSE Emerge.
• The face value of the share is Rs 10 and is priced 5.60 times of its face value on the lower side and 5.90 times on the higher side.
• Book running lead manager to the issue is Narnolia Financial Services.
• Compliance Officer for the issue is Drishti Dawara.

Profile of the company

The company is primarily engaged into the business of creation, production, distribution, and exhibition of television and digital content across broadcasting channels, apps and digital platforms as well as content writing, production and sale, purchase of rights. It is involved in every aspect of the content-making process, from development to distribution. This includes financing the projects, hiring actors and crew members, scouting locations, creating sets, managing the budgets and overseeing the entire production and post-production process.

Inspire Films is a subsidiary company of Beyond Dreams Entertainment. Its Corporate Promoter is also engaged in the business of creating and producing content for television shows, talkshows, game shows, event management, ad films, corporate films, cable TV, regional films, regional television, stage management, music videos, exhibiting and distributing cinematography films. The company along with Beyond Dreams Entertainment have produced more than 10,000 episodes till date for various Broadcasters, OTT Platforms, Apps and distributors.

Proceed is being used for:

• Working capital requirements of the company
• General corporate purposes
• Issue expenses

Industry overview

The Indian Media and Entertainment (M&E) industry is a sunrise sector for the economy and is making significant strides. The increasing availability of fast and cheap internet, rising incomes, and increasing purchases of consumer durables have significantly aided the industry. India’s media and entertainment industry are unique as compared to other markets. The industry is well known for its extremely high volumes and rising Average Revenue Per User (ARPU). 

India’s Media and entertainment Industry is expected to reach Rs 4,30,401 crore ($53.99 billion) by 2026. Advertising revenue in India is projected to reach Rs 394 billion ($5.42 billion) by 2024. Television would account for 40% of the Indian media market in 2024, followed by print media (13%), digital advertising (12%), cinema (9%), and the OTT and gaming industries (8%).

The Indian M&E industry is on an impressive growth path. The industry is expected to grow at a much faster rate than the global average rate. This can be majorly credited to rising incomes, increasing internet penetration and a growing push toward digital adoption. In the long run, growth is the M&E industry is expected in retail advertisement on the back of several players entering the food and beverages segment, E-commerce gaining more popularity in the country, and domestic companies testing out the waters. India’s rural regions are expected to be the next regions for growth. India has also gotten on board with 5G and is already planning for 6G well ahead of the future.

Pros and strengths

Experienced and strong management team: The Company’s management and team are comprised of experienced professionals. Led by Mr. Yash Arabinda Patnaik, who has several years of experience in the entertainment industry, its team is dedicated to the growth and development of its business. Its management team is composed of professionals with business and industrial knowledge, having created and acquired content for years. With their understanding of the Television industry, its management team focuses on the continued expansion and strengthening of its Content Library.

Organized and focused marketing team: A strong Managerial team is involved in the sales and marketing, pitching for prime projects at the appropriate time. Its team ensures compatibility and reliability with the clients servicing their needs and requirements efficiently. This is the reason its clients continue to associate with the company year on year. The company also focuses on the establishment of relationships with content delivery networks, and integration with social media sites. While identifying projects it’s needed to fulfil the organization’s futurestate vision. 

Established operations and proven track record: It has established operations in production, the company was formed in the year 2012 and since then it is focused on scaling up and increasing the revenue. It had a revenue of Rs 1,938.39 lakh in the FY 2021 which was increased to Rs 3,814.76 lakh in FY 2022 despite COVID crisis. In the FY 2023 the company had a revenue of Rs 4,883.16 lakh.

Risks and concerns

Dependent upon few customers: It has established and will continue to focus on strengthening long-standing relationships with its customers across the end use industries that it caters to. However, it depends on certain customers who have contributed a substantial portion of its total revenue from operations. There is no guarantee that it will retain the business of its existing key customers or maintain the current level of business with each of these customers. The loss of these customers or a loss of revenue from these customers may materially affect its business, financial condition, results of operations and cash flow

Face competition: Its industry is highly competitive and it faces intense competition from various players in the market. As competition intensifies, the price of content and talent may escalate, which may restrict its ability to access quality content and/or talent. It faces intense competition from both Indian and foreign competitors, many of which are substantially larger and have greater financial resources than it. Growth in the entertainment industry in recent years has attracted new industry participants and competitors. The entry of such competitors may change the media and entertainment industry in ways that may not favour it. The ability to secure quality content and talent is a key driver of its business and any inability to access them may adversely affect its operations and financial performance.

Working capital requirements: Its Business requires substantial requirement of working capital and financing to meet its working capital requirements. Further, its business strategy is to create and build a strong content library, with a focus on creating a diverse range of content, including TV shows, web series, and other forms of media. This strategy entails scaling up its content volume both with existing clients and new media ventures. Hence, increases the working capital requirement of the company.

Outlook

Inspire Films is primarily engaged into the business of creation, production, distribution, and exhibition of television and digital content across broadcasting channels, apps and digital platforms as well as content writing, production and sale, purchase of films rights. On the concern side, It faces intense competition from both Indian and foreign competitors, many of which are substantially larger and have greater financial resources than it. Growth in the entertainment industry in recent years has attracted new industry participants and competitors.

The issue has been offered in a price band of Rs 56-59 per equity share. The aggregate size of the offer is Rs 20.15 crore to Rs 21.23 crore based on lower and upper price band respectively. On performance front, the company’s total Income for the period ended March 31, 2023, stood at Rs 4,884.82 lakh whereas in Financial Year 2021-22 it stood at Rs 3,815.28 lakh representing an increase of 28.03%.The increase in total income of the company is due to a significant increase in the revenue of the company and general growth in the business operations of the company. The restated profit after tax for the Period ended March 31, 2023, stood at Rs 404.82 lakh whereas in Financial Year 2021-22 it stood at Rs 25.92 lakh. Meanwhile, the company intends to focus on creating a large and diverse content library that includes TV shows, web series, and other types of content. Its focus is to scale up the content volume with existing clients as well as with new media. Its aim is to increase its share in the wallet of its clients. The key elements of its business strategy is to adopt a de-risking expansion strategy to expand in multiple segments of the business and scale up the business significantly.