Stock Synopsis: Crest Animation Studios

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Crest Animation Studios

Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=385
Printed Date: 21/Apr/2025 at 6:12pm

Topic: Crest Animation Studios

Posted By: Equity Buff
Subject: Crest Animation Studios
Date Posted: 21/Sep/2006 at 10:38am

Dear Basant,

Have you looked at Crest Animation. Through Rich Crest Animation they are the only 5 studios in the world for 3D animation. The opportunity seems to be large. Can the company deliver ? Your Views?

Replies:

Posted By: investor
Date Posted: 21/Sep/2006 at 11:54am

This was another of Ramesh Damani's favourites some time back, somehow fell of the radar of his chats. Im not sure if he is still holding it or not.

Posted By: nav_1996
Date Posted: 22/Sep/2006 at 1:01pm

Tata Elxsi has got into animation and is a more dependable company. You may want to have a look at that. I am bit wary of animation as I am hearing about this huge opportunity since last 5 years.

Posted By: basant
Date Posted: 22/Sep/2006 at 1:24pm

While annimation is a big opportunity I am not sure if it has that kind of entry barrier. In technology we should stick to leaders. Crest suffers from

1) Not a sector leader (I keep repeating this phrase very often)

2) Unknown management who are yet to deliver.

Now while the oppportunity is big we need dependable players to play this. Also as Navendu mentioned Tata Elixsi is another play but with their software business dilutes their overall annimation revenues. A couple of years back we had a movie titled "Dhoom" I am told that Tata Elixsi had done the annimation but there has been no dhoom in the stock.

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

Posted By: Equity Buff
Date Posted: 22/Sep/2006 at 2:47pm

Basant,

Thanks for your views.

A) Not only in technology but in overall mid cap space isnt it better to stick with the sector leaders (No. 1 & No. 2) ?

B) In animation space isn't Crest the sector leader or one of the leading players?

C) Since Ramesh Damani was very interseted in this stock (as per post by investor) dont you think this stock is atleast worth investigation ?

D) There are many stocks which have not delivered in the past for some reason or another but after sometine some of them have really done well due to change in industry fundamentals or much more focus my management etc. etc.

E) Is entry barrier always so important ? For example in Software industry entry barrier is not high but we have had some serious multi multi baggers from this industry .

Rgds.

Equity Buff

Posted By: Equity Buff
Date Posted: 22/Sep/2006 at 2:53pm

About unknown management (not necessarily speaking about Crest), but multi baggers normally come from managements that are not that well known(good management but not well known initially).

Rgds

Equity Buff.

Posted By: basant
Date Posted: 22/Sep/2006 at 3:39pm

You have hit the nail on the head but as we discussed in http://www.theequitydesk.com/forum/forum_posts.asp?TID=201 - first generation promoters and multibaggers these companies were sector leaders with growing EPS and healthy RoE.

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

Posted By: Equity Buff
Date Posted: 22/Sep/2006 at 5:25pm

Dear Basant,

I guess you must have seen my above post with points A), B), C), D), E). Would like your views on these points.

First generation promoters and multibaggers these companies were sector leaders with growing EPS and ROE:

Isn't Crest a sector leader in animation ?

Promoters are first generation.

This company in the past has suffered from due to lack of working capital funds and have thus not delivered. I am told that they have tied up their fund requirements for the next 3 to 4 yrs by preferential allotment and some debt (needs to be verified) and also the potential profits they can generate from each 3D animation movie is big. This should start showing from 2009 onwards. If this does turn out to be true then EPS and ROE would show a substantial jump. Many a times if we wait for clarity to emerge in terms of substantial improvemnent in EPS and ROE we can completely miss the stock as the stock in the meantime would have run up substantially.

Await your views and also await your views on my points in above post, points A), B), C), D), E).

Rgds

Equity Buff

Posted By: basant
Date Posted: 22/Sep/2006 at 5:36pm

Just tried putting my comments in block letters. I do not follow crest so closely so you may take my opinion keeping that in context.

A) Not only in technology but in overall mid cap space isnt it better to stick with the sector leaders (No. 1 & No. 2) ?YES IT IS.

B) In animation space isn't Crest the sector leader or one of the leading players? IT IS THE LEADER BUT A LEADER SHOWS EPS AND GROWTH. I MUST ADMIT THAT I HAVE NOT STUDIES CREST FOR QUITE SOME TIME.

C) Since Ramesh Damani was very interseted in this stock (as per post by investor) dont you think this stock is atleast worth investigation CANNOT COMMENT AS I THINK THIS IS NO REASON RSD WENT TERRIBLY WRONG IN JUNE THIS YEAR WHEN HE ASKED HIS CLIENT TO CASH OUT AT 10,000.MAYBE REETESH CAN ADD TO THIS.....

E) Is entry barrier always so important ? For example in Software industry entry barrier is not high but we have had some serious multi multi baggers from this industry THE MULTIBAGGERS CAME FROM THE LEADERS INFY/WIPRO ETC AFTER THAT NOTHING HAPPENED.

Posted By: Equity Buff
Date Posted: 22/Sep/2006 at 12:36pm

Dear Basant,

Thanks for your feedback.

Like I said I think Crest will show a marked improvement in eps and roe going forward and I am saying this only based on reaasonably reliable info. Like you said Infy and Wipro were sector leaders, but I say at at much higher league than Crest with hindsight to our advantage. Crest is also a sector leader in its space and I think it needs to be seriously researched.

Rgds

Equity Buff.

Posted By: investor
Date Posted: 04/Oct/2006 at 10:43am

I entered Tata Elxsi at 60 odd a few years ago and exited when it hit 170+ levels for the very first time about 18 months ago. And what a call that has turned out to be - since then it has remained stagnant in the band of 190-220, hitting 230 on a few occasions.

It is a small company, struggling for growth. Even though it has a division
in animation(Visual Computing Labs(VCL), which has done the graphics for all Yash Chopra movies in the last few years including Dhoom, Kal ho Na Ho, etc), what people dont realize is that it is mainly a software services company. Everyone including Damani(it is one of his core portfolio stocks) seems to think of it as an animation company, and since animation indusrty is supposed to be really big over next 3-5 years, everyone thinks Tata elxsi is a good bet.

No one knows the ground reality - VCL accounts for less than 5% of its
revenues, and it is still in the red ever since it was formed a couple of
years ago.

Originally posted by basant

Tata Group is too big to focus on some thing like Tata Elxsi.

This is the problem I see investing with the newer fast growing businesses within the Tata group. They cannot think beyond Steel, Auto beverages and software (TCS).

They had a great advantage http://www.theequitydesk.com/forum/forum_posts.asp?TID=202 - insurance telecom and http://www.theequitydesk.com/forum/forum_posts.asp?TID=103 - retailing through Trent but they seems to have given it away.That is why I have been upbeat on the http://www.theequitydesk.com/forum/forum_posts.asp?TID=201 - first generation promoters to give us multibaggers.

Posted By: basant
Date Posted: 04/Oct/2006 at 11:00am

Good point you make. The revenue mix is very important. You know all throughout the 2000 tech rally I held on to http://www.theequitydesk.com/forum/forum_posts.asp?TID=322 - L&T and thought that it would move. Never realised that software had a very small contribution to its total income. AT that time I looked at Wipro and said if Wipro can get a software PE why not http://www.theequitydesk.com/forum/forum_posts.asp?TID=322 - L&T . Now I realise how hollow my theory was at that point in time.

Posted By: Ajith
Date Posted: 05/Oct/2006 at 2:11pm

Tata Elxsi is operating in a space different from TCS so they do not compete with each other(unlike the old Tata Infotech which used to,according to an insider lose orders on account of this)I think, and I am sure given the promoter and sector potential Tata Elxsi would be a multibagger but I will not buy because the current undervalued situaion may reflect a merger valuaion.

I feel it is very unfair on the part of a reputed name like Tatas to not clarify their gameplan in a clearcut manner.

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Ajith

Posted By: basant
Date Posted: 05/Oct/2006 at 2:31pm

Absolutely over the past few years I think Tatas have not lived up to their name; I am making a very controversial statement but preferential offers; having two companies in the same business; are not the issues one would have associated a TATA with.

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

Posted By: sureshb
Date Posted: 06/Aug/2007 at 8:48pm

following mutual fund's schemes hold crest
1.jm emerging leaders.
2.sbi midcap fund

Posted By: ragbhat
Date Posted: 01/Sep/2010 at 3:04pm

file:///C:%5CDOCUME%7E1%5CADMINI%7E1%5CLOCALS%7E1%5CTemp%5Cmsohtml1%5C01%5Cclip_filelist.xml -

file:///C:%5CDOCUME%7E1%5CADMINI%7E1%5CLOCALS%7E1%5CTemp%5Cmsohtml1%5C01%5Cclip_filelist.xml - Septemeber 17 will b the D day for this stock..Their 1st movies’ international - will share profits with Lionsgate and its share - is 17.5% after recouping marketing, launch expenses of lionsgate as informed by their CFO to cnbctv18... This release , its hit or otherwise, will have far fetching repercussion not only on crest but on

Posted By: ragbhat
Date Posted: 07/Sep/2010 at 3:52pm

guys more that 15% up...time to enjoy the movie....

Posted By: anishc
Date Posted: 14/Jun/2011 at 3:54am

I've been following Crest for a while.

Alpha & Omega grossed $50mm worldwide. Not bad. Comparitively Ice Age made $800mn. The average in the animation space seems to be around what Crest made. The exceptional ones make $200mn+.

They've discontinued their activities in the gaming space and are focusing on movie production or hiring out their artists for serials and other small screen work.

Its promoters own only 10% of the stock. Crest has posted a net loss this year inspite of A&O. They have announced a couple of more movies for FY12 and FY13.

There is a lot of "hope" built into this stock that the animation industry will take off and Crest will ride the wave. I have my doubts.

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anish

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