Stock Review: Crest Animation

Crest Animation is into 3D animation and doing contractual work for the last one year. They have taken a conscious decision of moving into the film production. Their first film Alpha and Omega, a 3D animation film was released in the US last month and it received a good response. Post that, the company has changed their strategy by going into 3D movie production as well as 3D television software production.

Four such projects are underway and I hope they will be able to keep releasing one film every year maybe over the next four-five years because they are the least cost producers of 3D animation films. They have a good track record of completing the projects on time. Alpha and Omega, in which they have 50% stake, was completed well within the three-and-half year timeframe.

The critical part for any 3D animation film is completing it in time and with quality, both of which seem to be existing in this company. It does not have any baggage of debt and with a marketcap of just Rs 200 crore, even if any one of the movies perform well, with the intellectual property rights (IPR) remaining with the company, the stock has the prospect of vastly getting rerated over a period of time. The downside is very limited from hereon while it has potential maybe to give returns of 100-200% over the next couple of years.