Buy Eros International; target of Rs 260: ICICIdirect

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26 Aug, 2025 12:21

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ICICIdirect.com`s research report on Eros International Media“Eros reported its Q1FY15 numbers wherein the topline was at Rs 241.5 crore, up 29.6% YoY vs. estimate of Rs 200.1 crore on account of higher-than-expected growth in theatrical revenues even as the number of movies declined from 12 in Q1FY14 to nine in Q1FY15. The EBITDA came in at Rs 58.4 crore (I-direct expectation of Rs 36.0 crore) due to higher growth in revenue and relatively lower cost of movies due to a higher number of medium to low budget releases. The company reported a PAT of Rs 35.8 crore, which could have been higher but for the high interest costs of Rs 14.5 crore on account of higher debt and lower interest income.” “Eros is a leading producer/distributor and has a one of the largest film libraries of over 1200 films. Eros International has exhibited strong growth in the number of movie releases by reaching the tally of total 77 movies in FY13 and 69 movies in FY14 across Hindi, Tamil/Telugu and other languages. The company continues to get it’s movie selection right, evident from its presence in five out of top 10 box office releases in the year gone by. Movies such as “Goliyon Ki Rasleela – RamLeela’, ‘Jai Ho’, ‘R…Rajkumar’, ‘Grand Masti’, ‘One Nenokkadine’(Telugu), ‘Raanjhanaa’, ‘Singh Saab the Great’, ‘Krrish 3’ (Overseas), ‘Yeh Jawaani Hai Deewani’ (Overseas) turned out to be good bets for the company. In addition, Eros also enjoys a competitive advantage in terms of strong international presence owing to its parent company Eros PLC. We believe theatrical revenues (inclusive of overseas) will grow at a 17.7% and 15.9% YoY to Rs 904.1 crore and Rs 1048.1 crore in FY15E and FY16E, respectively, from Rs 768.3 crore in FY14. For large budget movies, Eros generally recovers the whole production cost even before theatrical release in the form of sale of music rights, satellite rights and 39% guaranteed cost recovery from its parent for international distribution. In addition, monetisation of its huge movie library over pay TV, innovative box office performance linked satellite rights and preview over premium TV (HBO Defined and HBO Hits) will further reduce its dependence on theatrical revenue, which currently stands at ~40%. We expect revenues from TV licensing to grow at 14.0% CAGR in FY14-16 to Rs 352.7 crore in FY16E.” “We expect consolidated revenue growth of 15.3% over FY14-16E and PAT CAGR over FY14-16E of 15.3%. We continue to maintain BUY rating valuing it at 9x P/E multiple. Hence, we arrive at a target price of Rs 260,” says ICICIdirect.com research report. 

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