We recommended a BUY on Balaji Telefilms at Rs. 43 in April 2013 when its market cap was Rs. 275 crores. At that time, the company had a total cash of Rs. 215 crores. We recommended Balaji due to its deep undervaluation, exploding growth in movie industry, maturing serial businesses, and focus on cost rationalization. In nearly 17 months, the stock has doubled to Rs. 75-80 range due to the change in investor perception and small improvement in its financials.

Professionalizing Management: From being a serial maker, Balaji Telefilms has now established itself as a large production house. In FY14, Balaji, under the leadership of Ekta Kapoor produced 5 movies totaling to around 20+ movies in last 9 years. Though the performance of the company has still not shown the kind of success we expected, the steps taking by the company are quite good. Balaji has recently roped in a lot of new talent and increased its own management bandwidth. The key-person added in the management is Mr. Sameer Nair. He was programming Chief of Star TV and was responsible for revamping the network by launching combination of 'Kaun Banega Crorepati' and the Balaji daily soaps on Star Plus in the year 2000. We have also liked the change in Ekta Kapoor's attitude from creativity only to profitable creativity.

New Management bought in Balaji Telefilms: Mr Sameer Nair, who has recently joined Balaji as a group CEO, bought 35,000 shares at nearly current market price of Rs. 80 from open market. This further instills confidence in the long term story of Balaji. 
At current market price of Rs. 76-80, Balaji has a market cap of Rs. 500 crores. The performance will only be seen in next 4-6 quarters, however, this stock can be accumulated at lower prices. Investors who are holding the stock yet can still enjoy the ride. With the group CEO buying the shares at ~Rs. 80, there could also be sharp near term upsides.

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