Animation industry comes of age in India

Animation industry comes of age in India
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First Published: Thu, Feb 15 2007. 12 10 AM IST
Updated: Thu, Feb 15 2007. 12 10 AM IST
When Hanuman, the first full-length Indian animation movie, hit the screens, it signalled the animation industry’s move away from being mere outsourcing companies. Despite Hanuman’s success, there have been no major developments in the domestic sector.
Nevertheless, the stocks of animation and entertainment media companies, with a hand in the animation pie, have risen faster than generic outsourcing companies in the past few weeks.
UTV Software Communications, Crest Animation Studios Ltd, Prime Focus and BAG Films all hit 52-week highs in January, moving up in consonance with the broader market. “The valuations are unjustified at current levels and the sooner it corrects, the better it would be”, said Arun Kejriwal, director, KRIS Research.
The animation industry is hoping for service tax exemption, 10-year tax holiday and customs duty waiver on hardware and software imports in the forthcoming budget. The industry has asked for concessions from the government, stating that it can be a potential employment generator. If any of the proposals comes through, it can aid industry growth, analysts say.
Grisih Swar, an analyst with ASK Raymond James who tracks UTV Software Communications, had given a buy call on the stock with a Rs310 price target. The stock touched a 52-week high of Rs335.90 on 5 February before retreating to Rs280.90 on Tuesday. “At current levels, the stock may have another 10% upside and a long-term buy,” said Swar. Business from gaming and Walt Disney could contribute to UTV’s revenues in 2008.
UTV as well as other players are now hoping to cash in on the gaming business, where the animation component can be approximately 60-70%. “Gaming and animation are moving to the mobile phone platform and industry should latch on to that,” says Arun Natarajan of Venture Intelligence.
“We are still in the initial phases of growth in the animation industry,” said another media analyst who expects a stable growth trajectory in the coming years. Crest, through its California-based subsidiary Rich Crest, has three releases lined up in collaboration with a US distributor. The full-length 3-D movies are expected to be released 2008 onwards.
Prime Focus had attracted big-time investors as they looked at the scale of infrastructure available with the company.
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First Published: Thu, Feb 15 2007. 12 10 AM IST
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