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Research
Eros International Media Ltd - Q2 FY2014 Results - First Cut - Microsec
Posted On : 2013-10-23 20:32:19( TIMEZONE : IST )
Eros International Media Ltd (Eros) announced its Q2 FY2014 results on 22 October 2013. While the company's top line remained below our estimates, it came above Bloomberg Consensus Estimates. On the bottom line front, the company's results beat our as well as street estimates.
While Eros' top line increased 7.9% q-o-q to Rs. 201.1 Crores, its bottom line expanded 26.2% sequentially to Rs. 37.0 Crores in Q2 FY2014. Growth in the company's revenues was mainly led by higher number of releases during the quarter compared with a quarter earlier. Eros released 14 new movies in Q2 FY2014 vis-Ã -vis 12 movies in Q1 FY2014. We expected the company to release 16 new movies during the quarter. As a result, Eros' top line lagged our estimates. Of the films released in Q2 FY2014, 4 were in Hindi while 10 were in Tamil. However, despite a lower than expected performance at revenues level, the company was able to report higher than expected operating and net profits level performance. 'Grand Masti' a modestly budged movie, which performed extremely well on box office, remained the prime reason for the same.
Added to that, Eros expanded content library of its online entertainment portal Eros Now by acquisition of Bollywood titles from UTV and Viacom. Furthermore, the company's channels, through a pact with HBO, HBO Defined and HBO Hits, which got an encouraging response on DTH Platforms, are now also available on Hathway and GTPL digital cable platforms. These factors that could help Eros to further diversify its revenue streams, may also support its profitability. Furthermore, with some big ticket movies to be released in the second half of the year, the company is likely to report a healthy performance in the latter half of the year as well. Eros' upcoming releases in H2 FY2014E include 'Ram-Leela', 'Rambo Rajkumar', 'Kochadaiyaan', 'Happy Ending', and several other smaller budget high concept movies. Moreover, the company holds overseas rights of 'Krrish 3', which is also expected to aid to its performance in H2 FY2014E.
Carrying with its strong performance in Q2 FY2014 and wealthy movie pipeline, Eros will be reporting a better H2 FY2014E performance, in our view. With this, we continue to rate the company a STRONG BUY with a target price of Rs. 265.
