Accumulate Eros International; tgt of Rs 190: GEPL Capital

GEPL Capital`s research report on Eros International Media

“Eros International Media Ltd (EROS) reported Sales of Rs 10,680mn for FY13 vs Rs 9,439mn in FY12, growth of 13 percent Y-o-Y. This was in line with our Net Sales estimates of Rs 10,550mn. We had factored in lack of major hits in FY13 which led to the sublime topline growth. EBITDA was Rs 2,263mn in FY13 vs Rs 2,124mn in FY12, up 36 percent & 4 percent lower than our estimates(Rs 2,348mn). Film-related expenses were similar to FY12 but Op. exp. increased as  percent of Sales from 10 percent in FY12 to 13 percent in FY13 due to advertising, print & media costs for its various releases. Consequently, EBITDA margin came in at 21.2 percent in FY13 vs 22.50 percent in FY12. PAT was at Rs 1,545 mn in FY13 vs Rs 1475 mn in FY12, up 5 percent and 5 percent higher than our estimates(Rs 1,470mn). Reason was 31 percent drop in Int. Exp. for FY13. However, Other Inc.(Rs 64 mn) was 67 percent lower due to sale of investments worth Rs 111 mn in FY12. Consequently, PAT Margin dropped 119 bps to 14.5 percent in FY13 vs 15.7 percent in FY12.” “At the CMP of Rs 164, EROS is trading at 5.64x its FY15E EPS of Rs 29. EROS reported sublime numbers for FY13 due to lack of any major hits, the company’s slate for FY14E looks lucrative with multi-starrer and big banner movies and other initiatives for monetizing its library. We attach a 6.5x exit PE multiple to arrive at the target price of Rs 190 with an ACCUMULATE rating,” says GEPL Capital research report.   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.

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