Dear Sir/Madam,
Eros international Media Ltd (Eros) announced its consolidated Q3 FY2013 results on 12 February 2013. While the company’s top line came in line with Bloomberg Consensus estimates, it slightly lagged our estimates. However, Eros’ bottom line came in line with our, but significantly above street estimates. A glimpse of the company’s quarterly performance vis-à-vis comparable quarters and estimates is as follows:
Eros’ revenues decreased 9.6% y-o-y to `369.3 Crores whereas its net profits contracted 6.4% y-o-y to `65.2 Crores in Q3 FY2013. The decline in top and bottom line were on expected lines as the year ago quarter included three of the country’s top five grossing movies’, including Ra One, performance, which were held in Eros’ portfolio, in its financials. However, the company reported better than expected profits on account of lower than expected finance costs and tax outlays. During the quarter, Eros’ performance was aided by successful releases of ‘English Vinglish’, ‘Son of Sardar’, ‘Maatraan’, ‘Thuppaki’, and ‘Khiladi 786’. Furthermore, overseas performance of ‘Dabangg 2’ supported its performance in Q3 FY2013. The company also launched two premium HD channels under its collaboration with HBO to garner benefits of digitization. Moreover, Eros offloaded 2.8% stake during the quarter to align its promoter shareholding with the SEBI guidelines. Added to that, the company announced an interim dividend of `1.5 per share to reward its shareholders.
Going forward, Eros is likely to come up with releases of ‘Attacks of 26/11’, ‘3G’, ‘Warning (3D)’, and ‘Go Goa Gone’ during Q4 FY2013E. Including these movies, the company has strong movie pipeline for next 24 months. Some of the key titles in the upcoming releases include ‘Ram Leela’, ‘Kochadaiyaan’, ‘Tanu weds Manu Season 2’, ‘Sarkar3’, ‘Rana’, ‘Ye Jawani Hai Diwani’, ‘Krrish 3’, and ‘Bajirao Mastani’. With strong movie pipeline and deals with HBO and Endemol, Eros is likely to keep reporting sustainable growth in its top and bottom line in the upcoming quarters as well. We continue to rate the company a BUY with a target price of `326 per share.
Regards,
Team Microsec Research
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