Kotak Insights | Date 13/10/2023
With an estimated 2.5 billion fans across countries, Cricket is now the world's second-most popular sport after Soccer.
Not so surprising, we’d say…
Cricket isn’t just a sport; it’s an emotion that unites millions. And it’s the major cricketing events that set the stage initially.
The ongoing ODI World Cup, a prestigious global event, is special in cricket's landscape.
These major cricket tournaments set the nation abuzz, and this buzz isn't limited to the stadiums. It reverberates through various industries.
For instance, the 2019 ODI World Cup in England generated Rs 3,600 crores in the nation’s economy.
Big sporting events like this lead to high consumer spending, which betters the prospects of several sectors, including hotels, consumer electronics and media.
This makes the ongoing Cricket World Cup 2023 more than just a tournament but also a potential catalyst for economic impact in India.
A report forecasts that this World Cup can boost the Indian economy by Rs 13,500 crore!
So, let’s take a closer look at how this influences various sectors.
The F&B Industry
What’s a match without some 'cricketainment' and mouth-watering snacks? The Food and Beverage (F&B) industry experiences a delightful surge in sales during cricketing extravaganzas.
The nation indulges in culinary delights while watching the games. Restaurants, cafes, and food companies can expect a feast of profits.
From the listed space, Zomato, Jubilant Foodworks and Devyani International could see a strong Q2 and Q3 as the World Cup impact may start reflecting in their numbers.
Shares of food delivery giant Zomato are already trading near their 52-week high, and it won’t take a genius to figure out the World Cup had a role to play in this.
According to the UK Gambling Commission, online gambling operators in the country saw a significant increase in activity during the 2018 FIFA World Cup tournament. Approximately £1.2 billion was wagered in the U.K. on the World Cup matches.
The tournament attracted regular bettors and brought in a new audience, contributing to this surge in online gaming.
The reason for this surge was simple: the high-profile nature of these events draws in both regular bettors and those who might not ordinarily engage in online betting.
We could go on and on, and provide various examples of a similar trend catching up…
In India’s case, the gaming megatrend is just getting started. Increased smartphone and data penetration could boost online gaming companies in the medium term.
The listed company at the centre is Nazara Technologies. It’s the only listed player in the online gaming industry. The company owns several renowned intellectual property or IPs, including Kiddopia, Animal Jam, and the World Cricket Championship.
E-commerce and Online Sales
The e-commerce sector is expected to see a bump from big-screen TVs to jerseys and cricket accessories due to the shopping spree.
This segment is even more exciting to track because the World Cup collides with India’s festive season after a long time.
On the back of multiple production linked incentive (PLI) schemes and other boosts from the government, the sentiment around the appliances and electronics industry was already positive. The ongoing World Cup adds more fuel to this bullish sentiment, and investors could expect a significant boost in select companies’ earnings.
A report by PTI states that the appliance and consumer electronics sector is poised to surpass Rs 70,000 crore in sales this year. Two major factors aiding this growth are multiple festivals (Onam, Ganesh Chaturthi, Durga Puja, and Diwali) and the World Cup.
Two prime beneficiaries we could think of are Dixon Technologies and PG Electroplast, as these companies are into consumer electronics, especially TVs and laptops.
Also, note that TV sales usually get a boost when there's a big tournament. During the 2019 Cricket World Cup in England, TV makers in India saw a good spike in their sales.
Advertising, Sponsorships and Telecast
Cricket matches are not just about boundaries; they’re about branding. Whenever the ball hits the fence, we can see flashy brands popping up in front of our eyes.
It’s simple economics…being seen in high-profile events guarantees that millions of eyes will see the brand name. It's a way to build awareness and improve their image quickly.
The ODI World Cup 2023 offers a prime platform for advertising and sponsorships. Smart strategies can lead to enhanced brand visibility and a potential stock boost. Investors keen on marketing trends might find this period particularly interesting.
The official broadcaster has roped in big sponsors, including Hindustan Unilever (HUL), M&M, and IndusInd Bank. These expensive sponsorship deals for the World Cup could generate revenue for the above names.
Meanwhile, you could look at TV18 Broadcast and Network18 Media from the telecast space.
Reliance's subsidiaries stand to benefit from the telecast rights of various platforms. With several media rights with Reliance and its subsidiaries, these companies could see a boost in their revenue from the ad and subscription segments.
Event Management and Hospitality
A couple of months ago, leading up to India's G20 summit, the domestic travel and hospitality industry got a boost, with hotels seeing increased bookings and a substantial surge in room pricing. Airfares also went up.
Similarly, the Cricket World Cup similarly impacts hotel and airline companies.
As per reports, Booking.com said they’re seeing a massive surge in demand for accommodations and flights due to the ICC Men's Cricket World Cup.
Even Make My Trip shows the same optimism, with the increasing percentage of bookings made well in advance.
Data shows that the number of visitors to India is from the U.K., Australia, the Netherlands, New Zealand, and Sri Lanka.
Investors looking for opportunities in this space could look at Indian Hotels, Lemon Tree Hotels and InterGlobe Aviation (IndiGo).
All that says that investors are now more convinced that Cricket is an industry that will be very large.
The sheer ambition is noteworthy as many stocks involved directly or indirectly in the Cricket World Cup 2023 are witnessing good momentum.
This could be the starting point of something big happening in the cricketing world that could impact the investing world somehow.
So, we’ll wait and see how this unfolds in the time to come.
Meanwhile, if you aren’t familiar with the game of Cricket or its economics, it won’t be a bad idea to start learning how it impacts the economy. There’s going to be a bunch of tournaments and big events lined up.
Until next time.
Sources: Kotak Securities, Economic Times, ICC, SponsorPulse
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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