Buy Eros International; target of Rs 326: Microsec

Microsec is bullish on Eros International Media and has recommended buy rating on the stock with a target of Rs 326 in its December 7, 2012 research report.
 
“We rate Eros International Media Limited (Eros) a ‘STRONG BUY’. Our rating underpins the company’s strategized business model, continued expansion of content library, strong distribution network and initiatives to enhance revenues through new business avenues. However, piracy of content and the government’s plans to launch uniform tax impedes our optimism a bit.”
 
“Eros’ business model enables it to monetize films from pre-sale to post theatrical stages. Furthermore, the company possesses the Intellectual Property rights for its contents, which are acquired at a negotiated price, even up to perpetuity. Its strong content library is monetized effectively through a strong distribution network and new business initiatives. As Content forms core of Eros’ business model, the company kept on improving and expanding its content library over the years. This helped it build a wealthy content library of over 1,900 Films. With healthy movie pipeline and planned expenditure to acquire content, Eros’ Content library is likely to remain wealthy and keep driving its revenues, going forward. Eros’ strong distribution network perfectly complements its rich content library. The company’s distribution network, including India, US, and UK, is spread across more than 50 countries. Its well established network helped it to hold leading share in all theatrical Indian language films in the US and UK during CY2011. Furthermore, new initiatives such as Eros Now and penetration on internet and mobile platforms could boost its performance.”
 
“We valued Eros based on PE methodology. With a targeted PE of 14.35x on FY2014E EPS of Rs22.74 we arrived at a target price of Rs326.00 for the stock. Our target price represents an annualized upside of 34.8% from CMP of Rs224.10,” says Microsec research report.

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