EROS International - Maintain the 'STRONG BUY' rating - Microsec

Delay in high profile movies such as Kochadaiyaan kept the performance below estimates in near term. However, from a long term perspective, such events may result in deferment of revenues not the loss of the same. As a result, in the long term, the company is likely to do well, in our view. Nevertheless, below expected near term performance at revenues as well as net profits levels led us to reduce our FY2014E and FY2015E estimates for the company.

Consequently, we reduced our estimated Diluted EPS for FY2014E to Rs. 18.44 from Rs. 22.74. Apart from subdued near term performance, slight increase in diluted number of shares accounted for this decline.

Factoring in this reduction and a targeted PE of 14.40x, we arrived at the target price of Rs. 265 for the stock. Our revised target price represents 18.7% reduction to the previous target price of Rs. 326 for the stock. Furthermore, it reflects an upside of 92.9% from the current market price of Rs. 137.40 per share.

With this, we continue to rate the stock a 'STRONG BUY' from a long term perspective.

Source : Equity Bulls

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