Box office collections growing well…
• Eros reported its Q1FY15 numbers wherein the topline was at | 241.5
crore, up 29.6% YoY vs. estimate of | 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 | 58.4 crore (I-direct expectation of | 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 | 35.8 crore, which could have been
higher but for the high interest costs of | 14.5 crore on account of
higher debt and lower interest income
Theatrical revenue continues to grow at good pace
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
| 904.1 crore and | 1048.1 crore in FY15E and FY16E, respectively, from
| 768.3 crore in FY14.
De-risked business model
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 | 352.7 crore in FY16E.
Regional movies gaining share
Eros is expanding its regional presence with a number of releases in the
Telugu, Tamil and other regional markets. FY14 ended with about 32
regional films, which accounted for about 20-25% of revenues. The
company expects the same to reach about 30-35% of revenues.
GST, if implemented, to lead to EBITDA margin expansion
Varying entertainment tax across states impacts EBITDA margins.
Implementation of GST would immensely reduce entertainment tax,
which can aid EBITDA margins by 100-200 bps.
Maintain BUY with revised target price of | 260
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 | 260.
��
• Eros reported its Q1FY15 numbers wherein the topline was at | 241.5
crore, up 29.6% YoY vs. estimate of | 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 | 58.4 crore (I-direct expectation of | 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 | 35.8 crore, which could have been
higher but for the high interest costs of | 14.5 crore on account of
higher debt and lower interest income
Theatrical revenue continues to grow at good pace
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
| 904.1 crore and | 1048.1 crore in FY15E and FY16E, respectively, from
| 768.3 crore in FY14.
De-risked business model
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 | 352.7 crore in FY16E.
Regional movies gaining share
Eros is expanding its regional presence with a number of releases in the
Telugu, Tamil and other regional markets. FY14 ended with about 32
regional films, which accounted for about 20-25% of revenues. The
company expects the same to reach about 30-35% of revenues.
GST, if implemented, to lead to EBITDA margin expansion
Varying entertainment tax across states impacts EBITDA margins.
Implementation of GST would immensely reduce entertainment tax,
which can aid EBITDA margins by 100-200 bps.
Maintain BUY with revised target price of | 260
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 | 260.
Link
http://content.icicidirect.com/mailimages/IDirect_ErosIntl_Q1FY15.pdf
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