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| Summary of Contents | STOCK UPDATE Eros International Media
Recommendation: Hold
Price target: Rs360
Current market price: Rs329 Impressive show, price target revised to Rs360 Key points - For Q2FY15, Eros International Media Ltd (EIML) reported a 19.3% Y-o-Y growth in revenues to Rs239.9 crore, led by movie releases like 'Aagadu' (Telugu), 'Singham Returns' (Overseas) and 'Mary Kom' (Overseas) among others, and also strong growth in the catalogue sales. EBITD margins improved by 515BPS YoY to 30.6% driven by higher contribution from the high-margin television syndication and catalogue sales. The net income for the quarter was up by 36% YoY to Rs50.1 crore.
- The management remains optimistic on growth prospects in FY2015 and FY2016E, driven by strong movies slate coupled with increasing opportunities in catalogue monetisation. Also, given the strong movies library, the management is planning to venture into premium pay TV for better monetisation, the plans for the said venture is expected to be out in the next six months. The company's foray into the Telugu market has been gaining steam and it already has a good presence in the Tamil market. The management indicated at co-production routes in southern market in the next 6 to 12 months.
- The movies slate for FY2015 has improved on the back of addition of big-starrer regional movies (Rajinikanth's Lingaa, Kaththi [Tamil, already released and hugely successful]) and other Hindi movies. Given the strong margins' outperformance and improving movies slate, we have increased our earnings estimates for FY2015 and FY2016E, and also introduced FY2017 estimates. We are positive on the EIML strategy on incremental focus on the regional movies mainly Telugu, where the market size is improving meaningfully. We have rolled over our target multiple to FY2017 and arrived at a price target of Rs360. The stock has already shot up by 46% in the last three months, thus given the limited upside from current levels, we maintain our Hold rating on the stock.
Pratibha Industries
Recommendation: Buy
Price target: Rs65
Current market price: Rs57 Execution momentum continues while leverage yet to be controlled; maintain Buy Key points - In Q2FY2015, Pratibha Industries Ltd (PIL)'s maintained strong execution with a 28% Y-o-Y growth in revenues, supported by an improvement of 56BPS margins. However, higher interest cost (up 41% YoY) and depreciation charge (up 33% YoY) led to lower profitability (the adjusted net profit fell by 26% YoY).
- The company's growth prospects seem to have revived on the back of an improvement in execution and better OPM, as has been witnessed over the past two quarters. A healthy order book of approximately Rs6,900 crore provides revenue visibility for the next 2.0-2.5 years. We estimate the earnings of the company would grow 2.4x over FY2014-16 driven by the factors mentioned above.
- We have revised our estimates upwards in view of signs of improvement in the operating performance of the company. Further, we expect a gradual improvement in the order inflow for the EPC sector as a whole which could further boost the company's order book. Consequently, we maintain our Buy rating on the stock with a price target of Rs65.
| | Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a position in the companies mentioned in the article. | |
| Regards,
The Sharekhan Research Team |
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