Top 5 Stocks to Benefit from the Upcoming Cricket World Cup 2023

Fans across India are hoping that ‘conservative’ India can lift the trophy after 12 years on home soil. India triumphed over Sri Lanka in the 2011 Cricket World Cup.

The tournament will be held from 5 October 2023 to 19 November 2023 and played across 10 venues in Hyderabad, Ahmedabad, Dharamsala, Delhi, Chennai, Lucknow, Pune, Bengaluru, Mumbai, and Kolkata.

To put things into context, the popularity of cricket in India is unmatched by any other country.

India has the highest number of cricket fans.

> India - 535 million

> China - 408 million (Yes, that's right. These many people have shown interest in cricket in China)

> US - 63 million

> Indonesia - 55 million

> Brazil - 35 million

With 2.5 billion estimated fans across countries, cricket is now the world's second-most popular sport after soccer (estimated 3.5 billion fans).

From an investing perspective, there are a lot of Indian businesses set to gain from these upcoming World Cup matches.

We say this because the last time when World Cup was held in England four years ago, the International Cricket Council (ICC) claims that it generated almost ₹36 billion (bn) in the country’s economy.

This was a result of visitors spending on hotel stays, airfares, among other consumer expenses. And we’ve already seen this happen in India in the past couple of months.

For instance, airfares have already shot up. A report states that economy-class tickets have gone up almost 3x in price on the day before high starring matches like India vs Pakistan.

Meanwhile, hotel tariffs are giving visitors a headache. Five-star hotels like Radisson Blu and ITC are charging ₹28,000 to 35,000 on 13 October 2023. These rooms cost up to ₹9,999 in August and September.

With that explanation out of the way, let’s look at the top Indian stocks set to benefit from the upcoming Cricket World Cup 2023.

#1 Nazara Technologies

First on the list is Nazara Technologies.

When it comes to online gaming, Nazara has set a benchmark with its renowned IPs. The company owns several IPs including Kiddopia, Animal Jam, and World Cricket Championship.

It offers interactive gaming, e-sports, adtech, and gamified early learning for users across India, Africa, and North America.

E-sports which is electronic sports viewership, has outpaced major sports leagues. With increased smart phone and data penetration, the gaming megatrend in India is just getting started.

We believe the biggest opportunity lies in the online gaming industry and Nazara Technologies being the only listed player in the industry, has a massive market waiting to be captured.

According to the Federation of Indian Fantasy Sports (FIFS), the self-regulatory industry body for fantasy gaming, the market size for online gaming is projected to grow from ₹346 bn in FY21 to an estimated ₹1.65 trillion by FY25, translating into a CAGR of 38%.

Coming to financials, Nazara recently posted its Q1 results with net profit coming in 31% higher on a 14% increase in net sales on a YoY basis. It also raised funds from Zerodha co-founder Nikhil Kamath for strategic acquisitions and investments in various companies.

The company is planning an overall fund raising of up to ₹7.5 bn in the coming months.

We’ll just have to wait and watch what diverse offerings Nazara comes up with in the coming weeks leading up to the Cricket World Cup 2023.

#2 TV18 Broadcast

Next on the list is TV18 Broadcast.

Telecast is another industry that stands to benefit the most from the upcoming world cup.

TV18 Broadcast is a listed subsidiary of the Network18 Group (which is owned by Reliance). It operates a portfolio of platforms across news, entertainment, and infotainment genres. It also houses the group’s motion picture business and over-the-top (OTT) platform - JioCinema.

The company has a dominant position across the genres it operates. As of financial year ended March 2023, it was the largest player in the news segment, the third-largest player in the entertainment segment and the second-largest player in the infotainment segment.

Last year, Reliance Chairman, Mukesh Ambani, bought the streaming rights for IPL (the second most valuable sporting league in the world) for a little over ₹205 bn.

So, Reliance is participating in the gaming trend via Viacom18 Media Pvt, a joint venture between Reliance and Paramount Global.

Now, whenever there’s news about acquisition of streaming rights by Viacom, the two telecast firms that benefit are Reliance owned TV18 Broadcast and Network18.

Let’s take the recent example. Both TV18 Broadcast and Network18 Media were in the news after Viacom 18 Media secured the five-year media rights for BCCI's home international games for the next five years.

In the case of TV18 Broadcast, it stands to benefit from the OTT platform as Sports18 (Viacom’s new channel) will telecast the matches on TV, while it will be live streamed on JioCinema.

Coming to financials, TV18 Broadcast reported strong growth in its Q1 results with revenue registering a massive 151% spike to ₹31.8 bn driven by the streaming of the Indian Premier League (IPL) on JioCinema. Net profit spiked over 50% to ₹912 million (m).

Going forward, expansion of the company’s OTT platform could spur the next leg of growth TV18 Broadcast.

#3 Network18 Media

Third on the list is Network18 Media.

Independent Media Trust acquired a controlling stake in Network18 in 2014, making it a subsidiary of Reliance.

Network18 is the media and entertainment business vertical of the Reliance group. It primarily acts as a holding company for its subsidiaries, which are involved in various segments of the media and entertainment business.

As we mentioned above, this is another subsidiary of Reliance that stands to benefit from the telecast rights of various platforms.

With several media rights now with Reliance and its subsidiaries, the group is trying to boost revenue through ads or a subscription model.

Here's an excerpt from a leading financial daily...

As Jio subscribers burn through their plans to watch cricket on their mobile devices, Ambani's carriage business will get an automatic lift from his investment in content.

After a tariff increase, the telecom users are finally paying him a little more than $2 a month; if he can get another $1 - by luring them with cricket and keeping them for other entertainment - his $38 billion-a-year consumer empire could bulk up some more.

For the quarter ended June 2023, Network18 Media reported consolidated revenue of ₹32.4 bn, a steep growth of 142% on a YoY basis driven by the performance of the IPL on JioCinema. Profit for the quarter was down 25% to ₹290 m.

# TV Stocks

For the upcoming festive season and the upcoming cricket world cup, consumer electronic retailers and other consumer businesses are expecting the momentum to build-up on account of favorable economic indicators and positive sentiment.

TV stocks could take centerstage as and when India is playing opponents…because a lot of televisions would be smashed if India loses.

Jokes apart, there’s evidence that TV sales get a boost when there’s a big tournament like the World Cup or FIFA. High-resolution TVs, in particular, see more demand.

In 2019, the ICC Cricket World Cup turned out to be a windfall for television makers in India as television sales spiked 25-30% in the first week of May. The World Cup tournament was held from May 30 to July 14 in England.

Could we see a similar effect play out this time around?

We don’t know for sure. While many people are switching to mobile phones and OTTs for sports, there are also a few who opt for smart televisions for a better viewing experience. So the data is mixed.

In the meantime, you could watch out for the leading players in the TV industry like Dixon Technologies and PG Electroplast.

Dixon Technologies is a multinational electronics manufacturing and services company. Its core competence lies in manufacturing consumer electronics used daily like televisions, washing machines, smartphones, LED bulbs, battens, downlighters, and CCTV security systems.

The company has long-term contracts with some of the most well-recognised brands like Samsung, Xiaomi, Panasonic, OnePlus, and Philips.

Its electronic manufacturing services (EMS) segment is a key contributor to revenue. The EMS theme exhibits strong traction with significant growth opportunities in India, making it an attractive long-term investment avenue.

Dixon is also a key beneficiary to the government's PLI (production linked incentives) scheme for the electronics segment.

In the case of PG Electroplast, the company develops printed circuit board assemblies for a wide range of applications on a turnkey basis. The principal business of the company is supplying PCB assemblies for leading TV manufacturers.

The company entered the LED TV business in 2022 in JV with Jaina India for Google-certified ODM TVs. It manufactures TVs of sizes ranging from 24" to 70".

So there you go…a list of stocks that present a promising opportunity for investors to capitalise on the market's positive momentum from the upcoming Cricket World Cup.

However, it's important to note that while these stocks show strong potential, investing always carries inherent risks.

Therefore, investors should exercise prudence, conduct thorough research, and consider diversification when making investment decisions.

We will continue to dig a little deeper into this topic and see if there are any other opportunities.

Stay tuned and happy investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com