Kuaishou IPO lights up India’s short-video space

Mumbai: Last month, Kuaishou listed on Hong Kong’s stock exchange at a valuation of $160 billion—nearly as much as larger rival TikTok’s worth. By way of comparison, the IPO makes Chinese short-video app almost as valuable as Qualcomm, a storied chipmaker and holder of foundational wireless technology patents, whose market capitalisation is $167 billion.These developments are being closely watched in India’s short-video space, which mushroomed in the aftermath of the TikTok ban in June last year.Over the past few months, Indian short-video apps have been consistently among the top free apps on Google’s Play store. Times Internet’s MX TakaTak, Dailyhunt’s Josh, Sharechat’s Moj are leading the pack and indicating the traction gained in the absence of their Chinese rivals.Investors see the Kuaishou IPO as a giant thumbs up for the sector. “It will be a big positive,” said Anand Lunia, founding partner at India Quotient, one of the investors in Moj. “Now you know how to value a non-American, early-stage content company. We’re going to see a huge amount of capital now coming into this space in India.”In recent months, Google has backed Dailyhunt’s Josh and InMobi’s Glance, signalling the rising investor interest in the sector.“This (Kuaishou IPO) should open doors for multiple IPOs too,” said Lunia. “We feel that there will potentially be over a dozen companies launching IPOs in the social space in China in the near future.”Kuaishou boasts of 300 million daily-active users, and its Indian counterparts would likely have about 20-30 million DAUs. But these are much younger companies, said an executive at a short-video app, requesting anonymity.“The success of Kuaishou’s IPO has demonstrated the massive potential of the global short video market,” said Karan Bedi, chief executive officer of MX TakaTak’s operator MX Player. “It’s success story is a reflection of this new content format's success in various markets around the world, including India...It's exciting to see for us, as India’s No.1 short-video platform.”Kiko, another local short-video platform, said that it has already added to its platform video commerce, which happens to be one of the major revenue streams for Kuaishou. “Currently, we are receiving nearly 100 orders per day and have attained a GMV of Rs 30 lakh per month. We have also recorded steady growth in GMV of 20% on a month-on-month basis,” CEO Shivam Varshney said.Sumit Ghosh, CEO of Chingari, said, “If multiple players can thrive successfully in a market like China, then multiple companies in this space can come out of India as well.” It indicates that India is a very promising opportunity for investors looking at the short-video market, he said.Some investors, however, differed.“While some Indian players in this space have hit early scale, their business models may not end up like Kuaishou’s,” said Deepak Gupta, founding partner of WEH Ventures, an investor in short-video app Trell. For example, virtual gifts are one of the biggest sources of revenue for Kuaishou, but it has not been proven in India yet, he said.India AngleMultiple experts ET spoke with said that Indian over-the-top (OTT) players can also look at a valuation that’s six times their topline after they achieve significant size—Rs 200-250 crore in revenue and 20-25 million paying subscribers.“There is huge competition in the India OTT space with 40-plus players, but in the last few months, especially during the pandemic, the consumption has jumped manifold,” said a top executive at an OTT service. “The rise in engagement levels as well as the number of users has certainly increased the valuation of the OTT players.” He said that strategic or private equity investors will look for investment opportunities with a minimum size of Rs 1,200-1,500 crore.“The pure-play OTT services will always have much higher multiples, some will manage a range of 6-8 times topline in the current environment. The broadcast or legacy companies tend to have lower multiples as the valuation is blended with broadcast,” said a senior investment banker.However, a top executive at a broadcaster-led OTT service said that, at present, there is no price discovery as players are fairly small. “There is no science to the valuation of OTT services right now in the country. Currently, it is a combination of fair value and using subscribers as surrogate,” he said. There are very few pureplay OTT players in India, which can boast a significant size and topline.Most of the companies have either legacy broadcast business, like Star (Disney+ Hotstar), Zee Entertainment Enterprises (Zee5), Viacom18 (Voot) and Sony Pictures Networks India (SonyLIV). Some are associated with production houses like Balaji Telefilms (Alt Balaji) and Eros International (Eros Now) and MXPlayer (Times Group). Others are international players like Netflix, Amazon Prime Video and Lionsgate Play.Disclaimer: MX TakaTak’s operator MXPlayer is owned by Times Internet, a part of the Times Group that publishes The Economic Times and ETtech.com.

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