Kotak Insights | Date 20/10/2023
The cricketing community didn’t stop over the weekend. We were about to witness one of the greatest clashes of all time.
India versus Pakistan.
And surely, it lived up to the billing.
One of the greatest rivalries couldn't have gotten bigger than this.
In the end, cricket's inclusion in the mainstream media seemed inevitable.
We even wrote an explainer about it and how the sport could have a great economic impact on India this year.
As it pertains, Cricket is all set to make its way back into the Olympics in 2028. The entry in the Olympics could be attributed to the well-executed tournaments orchestrated by the International Cricket Council (ICC).
You can see the interest growing when so many influential figures participate in the event. One of the biggest names in Bollywood - Shah Rukh Khan - has committed a huge sum to build a cricket stadium in Los Angeles.
How can one capitalise on this trending theme in the Indian stock market?
Let’s delve deeper into this topic and look at the stocks that could be the biggest beneficiaries.
Major sporting events trigger a surge in gaming app usage. This trend is expected to catch up this World Cup season.
Gaming giants like Nazara Technologies and Delta Corp are well-positioned to capitalise on this surge.
Nazara Technologies owns the sports web portal Sportskeeda, which could benefit from the cricket World Cup.
The gaming company has set a benchmark in online gaming with renowned intellectual properties (IPs) like Kiddopia, Animal Jam, and the World Cricket Championship. It offers interactive gaming, e-sports, ad tech, and gamified early learning in India, Africa, and North America.
Meanwhile, Delta Corp is India's only listed company engaged in the casino gaming industry.
Delta Corp also seems attractive at its current price, as it has endured a massive fall in the past few weeks (it’s down 60% from the top!) following GST notice and regulatory changes.
The market size for online gaming is projected to grow from Rs 346 billion in FY21 to an estimated Rs 1.65 trillion by FY25, translating into a compounded annual growth rate (CAGR) of 38%.
This should benefit Delta Corp, too, in some way.
The company’s historical track record shows it has doubled its revenue and profits over the last five years. Plus, it has a debt-free balance sheet.
So, these are the businesses one can track in the gaming space.
Major sporting events translate to heightened viewership, attracting advertisers.
The growing trend could benefit media companies and broadcasters like TV18 Broadcast and Network 18 Media.
TV18 owns many platforms across news, entertainment, and infotainment genres, as well as the over-the-top or OTT platform JioCinema.
Network18 Media – also a subsidiary of the Reliance group – stands to see traction from the telecast rights of various platforms on the back of increased viewership during the World Cup.
On the other hand, PVR Inox is another candidate. During the FIFA World Cup, the company scheduled regular screenings of matches across cities.
Reportedly, PVR Inox is in talks with the ICC to screen India matches and finals in the theatre.
The multiplex operator has 1,698 screens across 113 Indian cities, so imagine the ticket sales it could generate and the revenue from its expensive food & beverage sales.
The Cricket World Cup is set to draw hordes of fans to ten cities across India.
The hospitality sector, particularly The Indian Hotels Company (IHCL), is poised to reap the rewards.
Bookings have already picked up pace, with teams as well as spectators staying in its prime properties across host cities.
With hotels expecting near-full occupancy during the tournament, IHCL, managing various hotel chains, including Taj and Vivanta, could churn substantial profits due to increased demand and last-minute bookings.
Apart from Indian Hotels, there are some other obvious beneficiaries like IndiGo.
The airline is already enjoying benefits after reduced competitive intensity due to the halt in GoFirst’s operations. Indigo has since then been able to achieve reasonable pricing power.
The retail food industry is another sector primed to benefit during the ICC World Cup 2023. Fans flocking to witness the cricketing extravaganza will splurge on food.
Jubilant FoodWorks Limited, which operates well-known brands like Domino’s and Dunkin’ Donuts, is expected to surge in demand during this period.
Ditto for the food delivery platform Zomato. The largest food delivery and quick commerce platform could see a bump-up in total orders.
Apart from Jubilant, other quick service restaurants (QSRs) to enjoy similar benefits could be Devyani International, the largest franchisee of Yum brands (KFC and Pizza Hut) in India, and Sapphire Foods, which holds the second spot for the same brands.
Railways Stocks: Not everyone can afford flights, making Indian Railways a feasible option. IRCTC, a mini-ratna public-sector company, offers internet ticketing, catering, and tourism services exclusively to passengers travelling via Indian Railways.
Beverage Industry Stocks: Varun Beverages, a PepsiCo distributor, could witness increased soft drink sales, promotional campaigns, and potential partnerships, which usually escalate during major sporting events.
Liquor Stocks: As a liquor company, United Spirits may see increased sales during the ICC World Cup 2023 event as consumers celebrate by purchasing alcoholic beverages.
While we’ve spent a lot of time discussing the investing angle and the impact that Cricket could have on stocks, it’s important to remember how society takes up the adoption.
For now, professional athletes, celebrities and even musicians help drag the Cricket industry into the mainstream.
Ultimately, we’ll need real examples of the above companies observing a serious impact on their business because of Cricket to prove this trend is real.
As the 13th edition of the World Cup 2023 moves nervously into gear this week, who do you think has the chance to lift the trophy this time?
For now, the points on the table look puzzling. Initially, before the tournament started, experts had pegged Australia, India, Pakistan and England to be the top 4 contenders.
Everything has changed after a week, and this is now an open points table!
Do let us know your thoughts on who you think will be the top contender.
Until next time.
Sources: Kotak Securities, Money Control, Economic Times
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.
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