DEAR BOARDERS
EROS is a good and safe bet for 10 reasons as I have previously mentioned:
1)MNC Compnay. And henece there is transperance and corporate governance can be expected better than most Indian media companies.
2) Media industry was hampered in slowdown. Now it has revived. Even when slowdown is there People do not stop movies like people dont stop smoking or drinking. I mean those who are addicted and there are many who are addicted
3) It is into multi media format: a) Movies b) TV
4) It is also into Futuristic media:
A)VIDEOTUBE FOR MOVIE VIDEOS PAY PER CLIP ONLINE MODEL
B) VIDEO LIBRARY OF 1000 FILMS PLUS
C)DIRECT TO HOME ENTERTAINMENT MODE WHICH IS FUTURE IN BROADCASTING
D) DIGITAL MOVIE RELEASES WHERE USERS CAN PAY AND WATCH WHEN MOVIE IS RELEASED SITTING IN THEIR HOMES ON BIG LCD TVS INSTEAD OF GOING TO MULTIPLEX ALSO
5)It has tied up with leading production houses in India in film industry
6) Film industry due to strikes and no big banners and lack of capital due to slowdown was agffected in 2009 and first half 2010
7)IT has also tied up with Star TV to market and produce serials.
8) TV Add rates are said to explode now as companies seeing reviving demand are advertising more.
9) Film industry has matured big time. Now they are not concerned about budgets. 5 things have changed in Bollywood:
a) Film budgets crossing 50 crores
b) TV rights are sold 50 crore plus for big banner movies and hence they recover costs before release and because of multiplex format manage to get decent gains even if movie is flop.
c) Just in september a film called I ROBOT STARRING RAJNIKANT AND AISHWARYA RAI IS RELEASING WITH BUDGET OF 150 CRORES AND IS EXPECTED TO GET RECORD REVENUES EVER FOR ANY FORM OF INDIAN CINEMA.
d)COPORATISATION OF INDIAN BOLLYWOOD INDUSTRY WITH NEW STORIES NEW IDEAS etc. just like in Hollywood. EROS like UTV can also be big corporate house in future in Bollywood
10) India's middle class in small towns and villages are rising and every one likes moviesa and media entertainment. Now since their per capita is said to explode in next 5 years as India's GDP explodes in high growth phase from 1.2 trillion dollar to 2 trillion dollars in just 5 years Consumption is the biggest theme
FIRST CHOICE HAS GIVEN IPO ANALYSIS AS SUBSCRIBE...
" IPO ANALYSIS: EROS INTERNATIONAL MEDIA LIMITED – WILL HIT THE BOX-OFFICE, IN STOCK MARKET TOO. INVEST. "
Established and reputed name in the Indian film industry, Eros International Media is entering the capital market on 17-09-10. The company intends to mobilize Rs 350cr through the initial public offer. Enam Securities, Kotak Mahindra Capital, RBS Equities and Morgan Stanley are the BRLMs. The issue closes on 21-09-10. Eros International Media (EIML) is promoted by Eros International plc and Eros Worldwide.
BACKGROUND AND BUSINESS:
Eros Group, is a global player within the Indian media and entertainment sector that
has been in the business close to three decades. The Eros Group has an extensive film library and is in the business of sourcing Indian and other film content and exploiting it worldwide through its offices in India, UK, USA, UAE, Singapore, Australia, the Isle of Man and Fiji across formats such as theaters, home entertainment, television and digital new media. Eros plc, the holding company of the Eros Group, is listed on the Alternative Investment Market of the London Stock Exchange.
EIML exclusively source all Indian film content for the Eros Group and exploit such content across formats within India, Nepal and Bhutan.
The company has various rights to over 1,000 films which include Hindi, Tamil and other regional language films, including films such as Mughal-e-Azam, Om Shanti Om, Lage Raho Munnabhai and
Love Aaj Kal, which the company considers a key competitive advantage and an integral part of the business model. EIML also own rights to certain English language films for home entertainment distribution within India. The Hindi, Tamil, other regional and English language films together form the Eros India Library.
EMIL exploit and distribute end-to-end Indian film content within India, Nepal and Bhutan through multiple formats such as theaters, home entertainment, principally in the form of DVDs, VCDs and audio CDs, and television syndication, which primarily involves licensing the broadcasting rights to major satellite television broadcasting channels, cable television channels and terrestrial television channels. The company also distributes content via digital new media such as mobile ring tones, wallpapers and downloads, IPTV, DTH and other internet channels.
OBJECTS OF THE ISSUE:
Acquiring and co-producing Indian films, including primarily Hindi language films as well as certain Tamil and other regional language films and for general corporate purposes.
FINANCIALS:
RS IN CRORES (CONSOLIDATED)
08 09 10
TOTAL INCOME 490.18, 627.78, 640.88
NET PROFIT 41.12, 73.30, 83.18
EPS (Rs) 80.64, 143.73, 11.45
NOTE: The Company issued bonus shares in Dec 2009, in 13: 1 ratio. Prior to issue of bonus the shares, the capital of the company stood at Rs 5.10cr.
The average RONW during the last three years is in excess of 40%.
RISKS:
Changing consumer tastes may compromise the ability to predict which films will be popular with audiences in India and internationally.
The company is dependent on the Indian box office success of the films produced/distributed.
EILM derives revenues from theatrical exhibition of films by collecting a specified percentage of gross box office receipts from multiplex and single screen theater operators and, as there is no independent monitoring of such data in India, the company relies on theater operators and the sub-distributors to report relevant information to be accurate and in timely. While some single-screen operators have moved to a digital distribution model that provides greater clarity on the number of screenings given to films, multiplex operators and many other single-screen operators retain the traditional print model. There is a risk that gross box office receipts and sub-distribution revenues being inadvertently or purposefully under reported, misreported.
The average cost of acquisition of or subscription to Equity Shares by the Promoters is at Rs 0.07.
PLUS POINTS:
Valuable and well-developed content distribution network.
Portfolio approach to films and a strong regional presence.
Strong long-standing relationships with talent within the industry.
Experienced management team.
Brand Value of the - Eros name.
VALUATION AND RECOMMENDATIONS:
Well known brand in the film industry. In an uncertain industry, the company has performed consistently. At Rs 158 -175 the issue is attractively priced. Even at the upper band, the company demands a PE multiple around 16 of its FY 10 earnings, which is justified, considering the business potential and brand equity. CARE has awarded grade 4/5 for the IPO, indicating above average fundamentals. INVEST.
Regards
Setu
P.S. I will give my own forward projections as in case of GPPL and SKS later before IPO closing for benefit of boarders myself and i am not basing my views based on FIRST CHOICE ANALYSIS.
DISCLAIMER: These are just my personal views and opinion. I have not applied coz i am putting entire money on Vatech Wabag. But i have adviced clients to allocate 20% of their IPO Allocation fund to EROS for listing as well as long term gains. Boarders are adviced to see my previous advises and do due diligence of them and do there own research of Eros before applying. I should not be held liable for listing losses of any member on this board applying based on my views in EROS or who miss any other opportunities in primary or secondary markets due to my reccomendation
Zerodha (Trading & Demat Account)
RHP
IPO Guru (1300+ Posts, 500+ Likes)
