Kohi Apna Sa , the only Balaji Telefilms' daily soap on Zee TV, goes off air from 15 January 2003. Another Balaji show which will make an exit in January is Kutumb on Sony TV. Kutumb is however, being replaced by an even bigger Balaji show in Kahani Terri Merri, the latest "and biggest" serial from the Balaji Telefilms stable, is ready for launch.

An ICICI Securities (ISec) report dated 26 December states that Balaji's programming volumes are likely to improve.

The report mentions that conditional access systems (CAS) is likely to result in an increase in the number of channels. Balaji, being the biggest content providers in the country, is likely to benefit from this opportunity, the report adds.

The ISEC analysts believe that the number of channels, both free-to-air and pay, will increase during the next 2-3 years as the revenue pie for broadcasters increases due to a significant hike in their subscription revenues. The analysts also add that the number of niche channels is also likely to go up, which will require niche programming.

The ISEC report mentions that Balaji Telefilms, being the best and largest content producer in the country, is well placed to capture this new growth potential that will emerge on implementation of CAS.

The ISEC report states that Balaji's sequential growth is likely to continue in Q3FY03. The company is expected to register 7 per cent and 10 per cent QoQ increase in revenue and operating profit respectively, as per the ISEC analysts. The report adds that the cost control initiatives are likely to begin to reflect in this quarter.

The analysts feel that the replacement of its programme on Sony at the same/higher realisations and the success of its weekend programming will be the key triggers for the stock.

Sequential revenue growth of 7 per cent:
The ISEC report states that Balaji will register a revenue growth of 7 per cent QoQ and 73 per cent YoY due to fresh programming on Sahara, weekend programme on Sony and improved revenues from the southern programmes.

Cost control to aid margin improvement:
The ISEC report mentions that the focus on cost is likely to pay off from Q3FY03 onwards. By March 2003, Balaji is expected to shoot all its programmes in its own facilities, saving on high lease rentals. We expect the operating profit to improve 10 per cent QoQ and OPM to go up to 52.7 per cent in Q3FY03 from 51 per cent Q2Y03.

The report states that the earnings were likely to grow 17.5 per cent in FY04E. Balaji's FY03E earnings are not only sustainable, but are also likely to grow 17.5 per cent in FY04E on the back of 89.9 per cent YoY growth in FY03E. The confidence demonstrated by Sony by asking Balaji to provide fresh programming to replace its existing flagging programme corroborates our optimism. Success on weekend programming is likely to take Balaji's growth trajectory to much higher levels.

Stock likely to get re-rated:
The report states that the alleviation of concerns regarding sustainability of earnings will be a key stock price trigger. ISEC analysts might attempt to re-rate the stock from their earlier rating of Buy at Rs 83 (26 December).

Balaji's 'Kohi Apna Sa' to end run on Zee from 15 Jan
Sony to launch Balaji blockbuster 'Kahani Terri Merri' as 'Kutumb' replacement