|
Eros International Media Ltd (EIML), incorporated in Aug, 1994 is part of the Eros group which has been in the entertainment business for over three decades. It is well poised to tap the opportunity presented by Indian Media and Entertainment Industry driven by rising regionalization and digitisation through new distribution platforms like Digital Cable, DTH & IPTV. Distribution and sale of media content online also offers a huge potential for Eros. It sources all Indian film content for the Eros Group and exploits content across formats within India, Nepal and Bhutan. The international distribution rights for such films (excluding Tamil Language films) are sold to overseas affiliates. It is also engaged in co–production /production activity. EIML has registered a revenue and PAT CAGR of 58% and 45% over the past 4 years. We recommend investors to ‘SUBSCRIBE’ the issue.
Content Library – competitive advantage
The Eros India library has rights of over 1,000 films, comprising of previously released films and music videos. EMIL adds to the Eros India Library by regularly sourcing new and catalogue films for exploitation within India, Nepal and Bhutan as well as overseas.
Well-developed content distribution network
EIML is one of the few companies within the Indian media and entertainment sector to have an end-to-end (all format) distribution capability. The chain includes national theatrical distribution network, in-house music distribution capability with its own music record label, Eros Music, an in-house television syndication team, and its own home entertainment distribution division.
Diversified portfolio to reduce risk
EMIL’s portfolio of new releases includes a mix of big, medium and small budget films, both with established talent within the film industry and new and upcoming talent including actors, directors or co-producers. It has also forayed into other regional languages by acquisition and exploitation of film content.
Discount to peers; Recommend ‘Subscribe’
The company is valued at a P/E of 13.6x at the lower price band and 15.1x on the upper price band of FY10 EPS. Considering the post issue equity, EMIL will be valued at P/E of 17.9x on the lower price band and 19.3x on upper price band, which is at a discount compared to its peers.
Financial highlights
| Period to |
FY08 |
FY09 |
FY10 |
Q1 FY11 |
| (Rs mn) |
(12) |
(12) |
(12) |
(3) |
| Revenues |
4,747 |
6,265 |
6,409 |
1,263 |
| Yoy growth (%) |
117.8 |
32.0 |
2.3 |
- |
| Operating profit |
551 |
1,138 |
1,110 |
242 |
| OPM (%) |
11.6 |
18.2 |
17.3 |
19.1 |
| Reported PAT |
426 |
742 |
825 |
145 |
| Yoy growth (%) |
220.0 |
74.1 |
11.1 |
- |
| EPS (Rs) # |
6.2 |
10.6 |
11.6 |
8 |
| BV per share (Rs) |
11.4 |
22.1 |
33.1 |
35.5 |
| ROCE (%) # |
42.4 |
35.7 |
26.7 |
23.8 |
| RONW (%)# |
72.1 |
63.2 |
42.1 |
20.2 | Source: Company, India Infoline Research; # Annualised for Q1FY11
* EPS. BV has been adjusted for Bonus issue in the ratio 13:1
|