Animation industry stocks soar

By SiliconIndia   |   Thursday, 15 February 2007, 06:00 Hrs
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The animation industry in India has been in the news quite a lot, and with the release of Hanuman, the first full-length Indian animation movie last year, it was thought that it would finally move away from being mere outsourcing companies.

While there have been no major developments in the domestic sector, 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, reported Mint today.

This upswing in their fortunes—shares of UTV Software Communications, Crest Animation Studios Ltd, Prime Focus and BAG Films have all hit 52-week highs in January—are believed to be an outcome of its hopes for service tax exemption, 10-year tax holiday and customs duty waiver on hardware and software imports in the forthcoming budget.

But Arun Kejriwal, director, KRIS Research opines that the valuations are unjustified at current levels, “The sooner it corrects, the better it would be”, he told Mint.

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.

The publication noted that 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%. Says Arun Natarajan of Venture Intelligence: “Gaming and animation are moving to the mobile phone platform and industry should latch on to that.”

“We are still in the initial phases of growth in the animation industry,” another media analyst, who expects a stable growth trajectory in the coming years told the paper. While Crest, through its California-based subsidiary Rich Crest, has three releases lined up in collaboration with a US distributor, Prime Focus had attracted big-time investors as they looked at the scale of infrastructure available with the company. The full-length 3-D movies are expected to be released 2008 onwards, it was noted.

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