Indian Premier League franchise Chennai Super Kings has recently announced their financial results, and the numbers aren’t much in their favour. They have announced a profit after tax (PAT) of Rs 40.26 crore for 2020-21, 20 per cent less than the PAT of Rs 50.33 crore clocked in the previous financial year.
The franchise reported a 29 per cent fall in income from operations to Rs 247.83 crore in FY2021, against an income of Rs 350.27 crore in FY2020.
The company had reported a revenue of Rs 417.83 crore and clocked a PAT of Rs 111.2 crore in 2018-19, before the pandemic.
Commenting on the poor performance, Abhishek Ginodia, Director, Altius Investech remarked that Covid-19 was a direct hit on the company, impacting gate-money receipts and increasing expenses.
“It will remain under stress until things are back to normal. This is not a good sign for equity investors. But the good part is that they are able to deliver a positive bottom line,” he added.
Shares of the Chennai-based franchise are trading at Rs 88-92 ahead of the resumption of phase 2 of the 14th edition of IPL.
Sunil Chandak, Equity Strategist, Gennext Investrade, said the upcoming auction for two teams would be the biggest trigger in the re-rating of the company. He believes that there is an upside potential of 40-50 per cent from current levels.
“The new teams are likely to be auctioned at a valuation of Rs 4,000 crore, whereas profit-making CSK is available at Rs 2,700 crore. It has its own legacy and a strong brand value,” he added.
For the period under review, the operating profit of the IPL franchise stands at Rs 59.19 crore which is a decline of 12 per cent from the previous year.
The diluted EPS of the company has declined to 1.16 in 2020-21, against 1.43 in 2019-20 with no dividend being declared.