Market Strategy

52-WEEK BLOCKBUSTER: UTV SOFTWARE

K. Venkatasubramanian | Updated on November 05, 2011

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The stock of UTV Software Communications has rallied spectacularly over the past one year. The company had a fantastic FY11, with revenues increasing 40 per cent over the previous fiscal to Rs 929.5 crore, while net profits zoomed by 154 per cent to Rs 135.5 crore.

All its three segments — television, movies and gaming, expanded and all of them also delivered positive numbers at the EBIT (earnings before interest and taxes) level.

Movies that the company released, such as Delhi Belly, were big hits at the box office.

This led the first leg of the rally.

The bigger rally came after UTV announced in July that the company the company is looking to delist.

Walt Disney, one of the existing promoters, which held a little over 50 per cent of the shares in the company made the proposal to delist from the exchanges. The proposal is to buy 19.8 per cent of the shares from other promoters. A minimum of 90 per cent shareholding needs to be achieved by Walt Disney to delist UTV Software. The balance 20 per cent stake would be bought from the public.

The price of acquisition was fixed at Rs 1,000 a share. This immediately led to a substantial spike in the stock price and it has been hovering around these levels over the past few months.

Published on November 05, 2011

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