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Research
Buy Eros International - Unicon Wealth Management
Posted On : 2011-11-20 01:47:35( TIMEZONE : IST )
The Eros International Media Ltd (EIML) numbers were little disappointing, the company reported 6.3% decrease in revenue from INR 1866 mn in 2QFY11 to INR 1748 mn in 2QFY12. The decrease in the revenue was due to one of catalogue monetization deal in Ayngaran International (Tamil production and overseas distribution business) in the corresponding quarter pervious year. EBITDA also witnessed an decrease of 15%, with margins declining from 30% in 2QFY11 to 27% in 2QFY12. This decline was also due to catalogue monetizations which generally are high margins deals and increase in other expenditure. PAT also witnessed decrease in the 39.7% due to Forex loss of INR 53.6 mn and increase in the tax rate to ~29% from ~13% in 2QFY11. The quarter saw the release of "Murder 2", "Zindagi Na Milegi Dobara" (ZNMD), "Bol" and "Mausam".
- During H1 FY2012 EIML released of 42 films across various languages. Film releases include 12 in Hindi, 28 in Tamil and 2 in other regional languages
- Ra.One – was released in Diwali and has delivered magnificent performance. Till date, world wide gross box office collection stood at INR. 2.21 bn. The movie was released in 3QFY12.
- The company has added at least10 high profile movies to the future release pipeline, which include Housefull 2, Tanu Weds Manu 2 and Khiladi 786.
- Rockstar has in its first weekend reported a worldwide gross box office collection of INR 640 mn. Moreover, 3QFY12 will include satellite rights Zindagi Na Milegi Dobarar. Further, the company has another big release "Desi Boyz" lined up for release in end November 2011
Outlook & Valuation
At the CMP the stock trades at PE multiple of 14.8 x and 11.6x for FY12E and FY13E respectively. The company has a strong business model with management ability to execute projects. Given the revenue visibility from future movie slate and growing non theatrical revenue, we believe the company is well placed to take advantage of growing media penetration in the country. Moreover, Q3FY12 is expected to be strong quarter for the company given the performance of movies. Further, the company has another big release "Desi Boyz" lined up for release in end November 2011. We maintain BUY on the stock for a target price of INR 300.
