Eros International Media Ltd - Latin Manharlal

Incorporated in 1994, Eros International Media Ltd (Eros) - part of Eros Group - is one of the market leaders in the Indian film industry and has been one of the pioneers in taking Indian films to the global audiences by leveraging its well-established distribution network. The company co-produce, acquire and distribute Indian language films in multiple formats worldwide including; theatrical, television syndication & digital platforms.

Strong Parentage + Over 3 decades of presence

Being part of the Eros group, it enjoys strong parentage. The group has three decades of experience in its domain and has come a long way from being a mere film distributor to being a content aggregator. It has built a successful business model by co-producing, acquiring and distributing Hindi and other Indian regional language films across multiple channels such as theatre, television and digital new media platforms.

Unparalleled market position of Eros

Largest library of Indian entertainment with over 1,100 titles, Exploitation of old content on new platforms, Stable, recurring cash flows.

Well established distribution network of Theatre / TV, Internet and mobile, Music / Radio / Ringtones / Print.

Long-term relationship with talent: Mutually advantageous and long-term partnerships with film talent over many years, Timely execution of talent deals gives Eros International a significant competitive advantage.

Healthy Box Office performance in FY12

The company released a total of 77 films during FY12, including 27 Hindi and 50 regional language films. In CY2011, 4 of the top 10 Box Office grossing Hindi language films in India were Eros films (Source: Box Office India).

Positive Start to FY13E: 'Housefull 2' (Blockbuster) + 'Vicky Donor' (Super Hit)

'Housefull 2' has so far crossed earned a net Box Office collection of Rs.144 Crs worldwide. 'Vicky Donor" a small scale movie release has reported a net Box Office collection of Rs.45 Crs worldwide so far. With several high budget Hindi releases lined up across the year, CY2012E is expected to sustain the growth momentum witnessed in CY2011.

Catalogue Monetization: reliable source of recurring cash flow

Eros currently has a library comprising 1,100-plus films, which provides a reliable source of recurring cash flow. Even if the company does not produce any films, it can still earn revenues by monetizing its library. Currently, ~15 % of the total revenues come purely from Eros' library monetization and the company expects that this percentage will grow going forward given that there are going to be lot more platforms to deliver the content.

Acquisition of B4U Television Network to boost its presence

Eros has plans to acquire the remaining 76% in 'B4U Television Network' in a cash-plus-stock deal worth US$53.1 mn. B4U generates bulk of its revenues internationally, mostly through the fees earned from being a part of a cable or satellite service provider's subscription package, and also from advertising within India. We believe the deal will boost Eros' presence in the entertainment value chain.

At the CMP of Rs.161, the stock is trading at 7.7x its FY13E EPS of Rs.20.87. We recommend BUY on the stock with a 12-18 months target price of Rs.209, providing an upside of 30% from the current levels.

Source : Equity Bulls

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