Eros International Media, a part of Eros group, is seeking to raise up to Rs 350 crore via its IPO which opened on 17th September and will end on the 21st September. The price band is fixed between Rs.158-175 and the shares will be listed on both BSE and NSE. The Group is a global player within the Indian media and entertainment sector and has been in the business for around 30years. Indian company, Eros Digital Private Ltd. holds 30.39% stake and foreign company, Eros Worldwide holds 69.60% stake in the company. The company has an extensive film library and is in the business of sourcing Indian and other film content and exploiting it worldwide through its offices in India, UK, USA, UAE, Singapore, Australia, the Isle of Man and Fiji across formats such as theatres, home entertainment, television and digital new media. The issue proceeds, upto Rs280crore will be used for acquiring and co-producing Indian films and the remaining amount will be used towards general corporate purposes.
Taking a look at the fundamentals, the company has grown at 59% CAGR over the last five years. The company aims at releasing at least 50 movies a year, both in Hindi and regional languages. For the fiscal 2008-09, the company released 94 films whereas; the figure for 2007-08 was 65. The company has quite an interesting business model. The company was started in 1977 to exploit Indian content internationally and soon became a big player. Gradually, it created a 1000 film library. The company earns its revenues from the Indian box office, the satellite and television rights, international rights and also ancillary rights. The company is already hedged against any kind of downside risk on the international distribution front. In the near future the profitability of the company seems to be quite good with a line up of big budget, prospective block buster movies.
Given the diversified revenue stream from its business and the strong growth trajectory it has managed over the years, the current IPO cannot be given a miss.
A library of film content monetised through multiple media, a de-risked business model in its lucrative overseas distribution business and a pipeline of big-star-cast movies in the pipeline, which Eros is co-producing, are key positives. The downside of movies not doing well on the box office can be very well negated by its film library business.
Owing to an improving macro environment, higher disposable incomes, increasing number of multiplex screens, the production and distribution companies would be able to monetise their contents better in the coming years. Eros Media International Limited, with its strong distribution network and impressive content library, is a good long-term bet in the Indian Media space.
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