The film business of UTV Software has been valued at $309 million (Rs 1,250 crore) with the shares of the company’s film subsidiary, UTV Motion Pictures, which is listed on the Alternate Investment Market (AIM) of the London Stock Exchange.

The shares have been placed at $2.9 per share and the company has raised $77.33 million for 25 per cent of the equity.

UTV is an integrated player in the entertainment sector and produces and distributes films, makes television content and has forayed into the gaming industry by picking up a controlling stake in India Gaming and Ignition.

Moreover, the company is betting big on the broadcasting space and may launch a dozen channels in various genres, starting from the third quarter of the financial year 2008.

That could result in a dilution in the equity of UTV Broadcasting, as a considerable amount of capital - estimated around Rs 600 crore — will be needed.

Revenues in the financial year 2008 could double from Rs 174 crore, reported in financial year 2007, with several films and television content in the pipeline and also from the contribution from gaming industry.

The operating margin too could improve from 6.15 per cent achieved last year, driven by a strong growth in the top line. However, the commitments to the movie business are relatively high compared with the size of the company.

Moreover, start-up costs and execution risks for the channel business could also be taken into account given the competition in the space though the company will attempt to share the risk either with financial or strategic investors.

The stock has run up by over 60 per cent since the March quarter. At the current price of Rs 507, the stock trades at about 41 times estimated financial year 2008 earnings and prices in most of the initiatives being taken.