Buy Eros International; target Rs 228: Firstcall Research

Firstcall Research is bullish on Eros International Media (EIML) and has recommended buy rating on the stock with a target price of Rs 228 in its January 08, 2013 research report.

"EIML is a leading global company in the Indian filmed entertainment industry that acquires coproduces and distributes Indian language films in multiple formats. During the quarter, the robust growth of Net Sales is increased by 31.16% to Rs. 2292.70 million. Eros International Plc & HBO Asia made a joint announcement to launch two new premium advertising-free movie channels, HBO DEFINED and HBO HITS in India. EIML has released 19 films during Q2FY13 in different languages (3 Hindi, 16 Tamil & other regional language films 23 films in Q2 FY12. EIML has bagged the Top Grossing Banner & Excellence in International Distribution awards at the Zee ETC Bollywood Business Awards 2012. EIML recently signed a licensing agreement with colors’ Viacom18 Media Pvt. Ltd. Net Sales and PAT of the company are expected to grow at a CAGR of 26% and 22% over 2011 to 2014E respectively. The company is a global player within the Indian media and entertainment arena, reported its financial results for the quarter ended 30 Sept, 2012. Eros' net profit declines to Rs.260.80 million against Rs.273.50 million in the corresponding quarter ending of previous year, a decrease of 4.64%. Revenue for the quarter rose 31.16% to Rs.2292.70 million from Rs.1748.00 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.2.84 a share during the quarter, registering 5.02% decrease over previous year period. Profit before interest, depreciation and tax is Rs.440.30 millions as against Rs.421.70 millions in the corresponding period of the previous year. During the quarter variable cost rose by 40 per cent mainly on account of increase in operating expenses by 50% along with consideration of depreciation in the rupee impact. Total expenditure in Q2 FY13 was at Rs. 1887.00 million as against Rs.1348.10 million in Q2 FY12. Employee Remuneration & Other Benefits rose to Rs.68.80 million against Rs.52.90 millions in the corresponding period of the previous year. Other Expenditure stood at Rs. 120.70 million and operating expenses is Rs. 1654.60 million in Q2 FY13 is the primarily attributable to growth of expenditure. At the current market price of Rs.204.00, the stock P/E ratio is at 10.42 x FY13E and 8.78 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.19.58 and Rs.23.23 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 26% and 22% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 6.38 x for FY13E and 5.41 x for FY14E. Price to Book Value of the stock is expected to be at 1.85 x and 1.53 x respectively for FY13E and FY14E. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend 'BUY' in this particular scrip with a target price of Rs 228 for Medium to Long term investment," says Firstcall Research report. Public holding more than 90% in Indian cos Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. To read the full report click on the attachment

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