Thinking Hats Entertainment coming with IPO to raise Rs 15.09 crore

Thinking Hats Entertainment Solutions

• Thinking Hats Entertainment Solutions is coming out with an initial public offering (IPO) of 34,29,000 equity shares in a price band Rs 42-44 per equity share.
• The issue will open on September 25, 2024 and will close on September 27, 2024.
• The shares will be listed on SME Platform of NSE.
• The face value of the share is Rs 10 and is priced 4.20 times of its face value on the lower side and 4.40 times on the higher side.
• Book running lead manager to the issue is Horizon Management.
• Compliance Officer for the issue is Palak Jain.

Profile of the company

Thinking Hats Entertainment Solutions has evolved from a premier concept development, event design and production company that specializes in live events, corporate, MICE (Meetings, Incentives, Conferences and Exhibitions), social and virtual events to an OTT content production and experiential marketing company with a strong focus on content development, intellectual property curation and tech centric product development.

With more than a decade of experience in creating events and experiences, the company is a team of visionaries who convert clients' dreams into reality. Its creative and personalized approach executes every event with the utmost professionalism and provides its clients with dependable solutions and the finest attention to detail. Thinking Hats began its event management and retail visual merchandising since incorporation and has been offering event management services related to Corporates Events, Corporate Meetings, Conference Management, Brands and Product Launches, Lifestyle and Fashion Events, Exhibitions & Fairs, Entertainment Show Management, Pan-India Ground Activations and Artist Management among others in India. Its Event Management services are offered from Media, Retail, Financial, Food, Education, Healthcare and Technology industries. It also provides prominent display and retail visual merchandise with a broad spectrum of offerings and in-store solutions to various retail stores.

With exclusive content made for platforms such as Netflix, Amazon, Sony Liv, MX Player, Disney+Hotstar, Voot, Zee5, etc. OTT Platforms have become increasingly popular in recent years due to their convenience and flexibility, allowing consumers to watch their favourite shows and movies on a variety of devices, including smartphones, tablets, laptops, and smart TVs. It also offers a wider range of content options compared to traditional cable TV. The contracts for OTT are typically 6 to 10 episodes for 45- 60-minute episodes, which then gets extended to multiple seasons based on the popularity of the series. Realising the opportunity in OTT space and the expertise of management team, the company has ventured into production of OTT contents in the year 2019. Creativity and courage are the core values at Thinking Hats’ work culture. As a part of its storytelling expertise, Thinking Hats has produced two web series for OTT platforms i.e., “Aapkey Kamrey Me Koi Rehta Hai” and “Kathmandu Connection 2”, and one Bengali Movie “Onek Diner Pore”. Apart from movies and OTT web series, it also makes short films for YouTube content and corporate event movies.

Proceed is being used for:

• Prepayment or repayment of all or a portion of certain loans availed by the company
• Funding of working capital requirements of the company
• General corporate purposes

Industry Overview

The India Events & Exhibition Market is segmented by Type (B2B, B2C, Mixed/Hybrid), Revenue Stream (Exhibitor Fee, Sponsorship Fee, Entrance Fee, Services), End User (Consumer Goods and Retail, Automotive and Transportation, Industrial, Entertainment, Real Estate and Property, Hospitality, Healthcare, and Pharmaceutical). The event and exhibition market has experienced significant growth in recent years, driven by factors such as increasing corporate spending on marketing and branding, technological advancements enhancing event experiences, and the rising popularity of experiential marketing. Additionally, globalization has expanded the reach and scale of events, contributing to market expansion. Key growth drivers for the industry are trade shows, exhibitions, digital activation, sports leagues, rural expansion, and government-initiated projects, followed by IP (Intellectual Property), personal events, product launches, expansion of mini-metros, and below-the-line marketing spending. Furthermore, the industry benefits from globalization as businesses expand their reach and seek to establish a presence in new markets through events and exhibitions. This growth is expected to continue as organizations recognize the value of face-to-face interactions in an increasingly digital world.

Meanwhile, the Indian Media and Entertainment (M&E) industry is a sunrise sector for the economy and is making significant strides. The increasing availability of fast and cheap internet, rising incomes, and increasing purchases of consumer durables have significantly aided the industry. The Indian Media & Entertainment (M&E) sector is set for substantial growth, with a projected 10.2% increase, reaching Rs. 2.55 trillion ($30.8 billion) by 2024 and a 10% CAGR, hitting Rs. 3.08 trillion ($37.2 billion) by 2026. Advertising revenue in India is projected to reach Rs. 330 billion ($3.98 billion) by 2024. The share of traditional media (television, print, filmed entertainment, OOH, music, radio) stood at 57% of the media and entertainment sector revenues in 2023. The country's entertainment and media industry is expected to see a growth of 9.7% annually in revenues to reach $73.6 billion by 2027.

The Indian M&E industry is on an impressive growth path. The industry is expected to grow at a much faster rate than the global average rate. This can be majorly credited to rising incomes, increasing internet penetration and a growing push toward digital adoption. In the long run, growth of the M&E industry is expected in retail advertisement on the back of several players entering the food and beverages segment, E-commerce gaining more popularity in the country, and domestic companies testing out the waters. India’s rural regions are expected to be the next regions for growth. India has also gotten on board with 5G and is already planning for 6G well ahead of the future. This push towards digital adoption especially in the rural regions will provide advertisers and publishers with an immense opportunity to capture untapped markets and help grow India’s media and entertainment industry forward.

Pros and strengths

Established brand name: The company is well known through its brand named -- Thinking Hats -- in the experiential marketing industry. The brands and the company’s experience have helped it earn the trust and goodwill of its customer which further has an influence on the prospective client’s decision. Its well established and recognizable brand and the reputation built by it since the last more than 10 years has and will enable it to increase its clientele list in the future.

Strong in-house concept creation and designing expertise: Revolutionary ideas and an experienced yet talented team define its in house concept creation and designing. It develops new concepts right from scratch and bring into reality. The company’s innovative design team makes sure that the project is one of a kind and that its clients and audience go home with happy memories. Events, both intimate in scale and grand in scope, have specific needs to deliver a seamless production. It offers complete design to see event from concept through to execution. Experienced and highly professional designer staff ensures that event runs seamlessly.

Strong relationship with broadcasters and channels: The company has created a strong relationship with other participants in the entertainment industry. Its content and services have established it as creative player in the industry. It has developed content across various segments, including regional language content. This has allowed it to curate a diverse and comprehensive content library that caters to the varied tastes and preferences of its audience. Its ability to aggregate content rights from different segments has been made possible by its strong industry connections.

Risks and concerns  

Significant revenue comes from Event Management division: The company is a concept development, event design and production company that specializes in live events, corporate, MICE (Meetings, Incentives, Conferences and Exhibitions), social and virtual events to an OTT content production and experiential marketing. While it has a diversified service portfolio, it is highly dependent upon its event management division for its revenue from operations. The company garnered 56.66%, 64.70% and 50.07% of revenue from Event Management division in FY24, FY23 and FY22 respectively. The company’s future success depends in part on its ability to reduce its dependence on its event management division by increasing exposure towards its other business segments. Any failure to successfully offer its existing services or diversify its service portfolio could adversely affect its business, financial condition, cash flows and results of operations.

Maximum revenue comes from limited customer: The company is a concept development, event design and production company that specializes in live events, corporate, MICE (Meetings, Incentives, Conferences and Exhibitions), social and virtual events to an OTT content production and experiential marketing. It is dependent upon few customers for maximum revenue from operation. The company generated 63.75%, 83.34% and 92.16% of its revenue from top 5 customers in FY24, FY23 and FY22 respectively. The loss of one or more of these significant or key customers or a reduction in the amount of business it obtains from them could have an adverse effect on its business, results of operations, financial condition and cash flows. The company cannot assure that it will be able to maintain historic levels of business or that it will be able to significantly reduce customer concentration in the future.

Business is subject to occasional/ seasonal fluctuations: The company is engaged in the business of event management. Most of these events and festivals are undertaken during certain specific period each year. Thus, it is subject to the seasonality of business with regards to the date and timing of the events undertaken by its customers. Further, the business of the company involves events like brand launch, iconic music concerts or large-scale tradeshows, which may be affected by seasonal factors that may restrict its ability to carry on activities related to these events. Extreme weather conditions like heavy or sustained rainfalls or other extreme wind conditions such as cyclones could result in delays or disruptions to its operations during the critical periods of its events. During periods of curtailed activity due to adverse weather conditions or any other reason, it may continue to incur operating expenses. Also, adverse seasonal developments may also require the evacuation of personnel, suspension or curtailment of operations, resulting in damage to equipment or personnel at the event site. Any such fluctuations may adversely affect its total income, cash flows, results of operations and financial conditions.

Outlook

Thinking Hats Entertainment Solutions specializes in concept development, event design, and production for live events, corporate functions, MICE, social and virtual events, as well as OTT content production and experiential marketing with a focus on content development, intellectual property curation, and tech-centric product development. It has established connections with their clients and key figures in the entertainment industry, such as writers, directors, and streaming platforms. Moreover, it has strong brand recognition and a reputation for excellence in successful event management and retail visual merchandising. On the concern side, the company significantly relies on event management division for a significant amount of revenue, and any interruption or reduction in the customers in the said division may adversely affect its business and results of operations. Moreover, it is dependent upon few customers for maximum revenue from operation. The loss of one or more of these significant or key customers or a reduction in the amount of business it obtains from them could have an adverse effect on its business, results of operations, financial condition and cash flows.

The company is coming out with a maiden IPO of 34,29,000 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 42-44 per equity share. The aggregate size of the offer is around Rs 14.40 crore to Rs 15.09 crore based on lower and upper price band respectively. On performance front, total revenue has increased by Rs 448.43 lakh and 20.25%, from Rs 2,214.75 lakh in the fiscal year ended March 31, 2023 to Rs 2,663.18 lakh in the fiscal year ended March 31, 2024. The increase in revenue was on account of increase in revenue from event management and retail visual merchandising. Net Profit has increased by Rs 108.37 lakh and 53.97% from Rs 200.79 lakh in the fiscal year ended March 31, 2023 to Rs 309.16 lakh in the fiscal year ended March 31, 2024.

As a production house, the company is committed to staying ahead of the curve and embracing new technologies and emerging new platforms. Its goal is to become a technology-based entertainment company, leveraging the latest tools and innovations to create even more engaging content for its audiences. To achieve this, the company is actively scouting for new technology solutions and exploring different platforms that have the potential to transform the event and entertainment industry. It recognizes that Artificial Intelligence (AI), Augmented Reality (AR), Visual Reality (VR), photos, content licencing including music & videos, amination and others are key growth areas, and it is committed to expanding its business in these areas.