Dolat Capital is bullish on Shemaroo Entertainment has recommended buy rating on the stock with a target price of Rs 575 in its research report dated July 27, 2018.
Dolat Capital's research report on Shemaroo Entertainment
SHEM reported a healthy Q1FY19 with revenue growth of 19% YoY to ` 1234 (DCMe: `1219). EBITDA margin declined 70bps YoY to 31.5% due to higher operating expenditure. Traditional media segment grew 12.5% YoY on account of low base of DeMo. New media segment grew 36.3% YoY on back of expansion towards digital reach. We expect a minor convergence in the margins due to investment in digital, weak revenue growth in the YouTube segment and higher expenditure towards manpower.
We expect margins to be in the range of 30-31% due to investment in digital and higher employee cost. SHEM is currently trading at inexpensive valuations of 12.3x/9.8x based on FY20/FY21 earnings estimates. we upgrade SHEM to BUY and rollover to Sep’19 TP of ` 575 (` 550 earlier) based on 13x one yr.
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