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Revenues of Rs1.5bn were 25% above our estimates, while EBIT margin of 18.5% was largely in
line with our estimate of 19.3%, driven by the success of Ready. We are bullish on Eros given the
strong release slate for FY12 and improving TV realizations.
1Q12 results: top line ahead of our expectations, margins broadly in line
Eros reported consolidated revenues of Rs1.5bn, up 21.8% yoy (+34.6% qoq). This was 25%
ahead of our estimates of Rs1.2bn. The top line growth was driven by blockbuster movie,
Ready (biggest hit in FY12 till date), as well as the success of Chalo Dilli and regional films
released during the quarter. Contribution from catalogue sales also remained strong during
the quarter.
EBIT margin was stable at 18.5%, flat yoy and up 774bp qoq, broadly in line with our estimate
of 19.3%. Despite solid growth in top line, margins were flat yoy largely due to higher
operating expenses (up 24.7% yoy). In absolute terms, EBIT was up 21.9% yoy to Rs285m,
20% above our forecast of Rs237m.
Non-operating income was higher than we expected at Rs53m, vs RBS estimate of negative
Rs9.9m, thanks to sharp jump in other income from Rs3.9m in 1Q11 to Rs84.1m, including
Rs25m related to lapse of stock options granted to a director on resignation.
Driven by strong growth at EBIT level and higher other income, PAT grew by 39.8% yoy and
59.4% qoq to Rs217m. This was 34% ahead of our estimate of Rs162m. Tax rate for the
quarter was at 31.0% versus our estimates of 28.2%. EPS was up 9.2% yoy to Rs2.37,
beating our forecast of Rs1.75.
Outlook looks robust with strong release pipeline
Following the success of Ready, Eros witnessed successful releases of big-budget movies –
Zindagi Na Milegi Dobara (grossed Rs525m in its opening weekend) and Murder 2 (Rs350m
in its opening weekend).
Further, we believe the revenue visibility for FY12 is significantly high as the release pipeline
remains strong, with as many as four big-budget films slated for release in 3Q12 (Ra.One,
Agent Vinod, Rockstar and DesiBoyz).
Management noted that Eros has recovered significant portion of its FY12 release slate
through pre-licensing of TV and music licensing contracts. With the largest ever film pipeline,
improving TV realizations and costs largely locked in, we believe Eros is well on track to meet
our expectations of strong revenue growth (31% yoy) and EBIT margin expansion (262bp
yoy) in FY12.
The stock currently trades at 12.4x our FY12F EPS.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Revenues of Rs1.5bn were 25% above our estimates, while EBIT margin of 18.5% was largely in
line with our estimate of 19.3%, driven by the success of Ready. We are bullish on Eros given the
strong release slate for FY12 and improving TV realizations.
1Q12 results: top line ahead of our expectations, margins broadly in line
Eros reported consolidated revenues of Rs1.5bn, up 21.8% yoy (+34.6% qoq). This was 25%
ahead of our estimates of Rs1.2bn. The top line growth was driven by blockbuster movie,
Ready (biggest hit in FY12 till date), as well as the success of Chalo Dilli and regional films
released during the quarter. Contribution from catalogue sales also remained strong during
the quarter.
EBIT margin was stable at 18.5%, flat yoy and up 774bp qoq, broadly in line with our estimate
of 19.3%. Despite solid growth in top line, margins were flat yoy largely due to higher
operating expenses (up 24.7% yoy). In absolute terms, EBIT was up 21.9% yoy to Rs285m,
20% above our forecast of Rs237m.
Non-operating income was higher than we expected at Rs53m, vs RBS estimate of negative
Rs9.9m, thanks to sharp jump in other income from Rs3.9m in 1Q11 to Rs84.1m, including
Rs25m related to lapse of stock options granted to a director on resignation.
Driven by strong growth at EBIT level and higher other income, PAT grew by 39.8% yoy and
59.4% qoq to Rs217m. This was 34% ahead of our estimate of Rs162m. Tax rate for the
quarter was at 31.0% versus our estimates of 28.2%. EPS was up 9.2% yoy to Rs2.37,
beating our forecast of Rs1.75.
Outlook looks robust with strong release pipeline
Following the success of Ready, Eros witnessed successful releases of big-budget movies –
Zindagi Na Milegi Dobara (grossed Rs525m in its opening weekend) and Murder 2 (Rs350m
in its opening weekend).
Further, we believe the revenue visibility for FY12 is significantly high as the release pipeline
remains strong, with as many as four big-budget films slated for release in 3Q12 (Ra.One,
Agent Vinod, Rockstar and DesiBoyz).
Management noted that Eros has recovered significant portion of its FY12 release slate
through pre-licensing of TV and music licensing contracts. With the largest ever film pipeline,
improving TV realizations and costs largely locked in, we believe Eros is well on track to meet
our expectations of strong revenue growth (31% yoy) and EBIT margin expansion (262bp
yoy) in FY12.
The stock currently trades at 12.4x our FY12F EPS.
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