'Subscribe' to Eros International Media:Nirmal Bang
Nirmal Bang has advised investors to ‘Subscribe’ to initial public offering of Eros International Media.
By ET Bureau |
MUMBAI: Nirmal Bang has advised investors to ‘Subscribe’ to initial public offering of Eros International Media. The company has entered the capital market with public issue of Rs 316 -350 crore by issuing share of face value Rs 10 each in the price band of Rs 158-175.
“We have compared Eros International Media with UTV Software Communications and Shree Ashtavinayak Cine Vision as they operate in similar kind of business. Eros had the highest CAGR at 58.3% in revenues among its peers over the past five years. While UTV Software Communications had a CAGR of 33.60% in revenues, Shree Ashtavinayak Cine Vision had a CAGR of 41.7% in revenues during the same period. It has much better EBITDA margins than UTV Software Communications while bit lower than that of Shree Ashtavinayak Cine Vision.
Based on price of Rs 175 (upper end of the price band) and company’s FY 2010 earnings the company will trade at a P/E multiple of 19.44x which is lower than its peers. Also, company looks attractive in terms of P/BV and EV/Sales multiple given that company is expected to grow at a rapid pace as compared to its peers.
The pipeline of movies to be released by Eros over the next two years will contribute to its top line growth as well as enrich its existing content library. The company is in a strong position to maintain a sustained financial performance by leveraging its business model as well as its extensive content library and looks attractive as compared to its peers. Therefore, we recommend SUBSCRIBE to this issue,” the report said.
Eros intends to use up to Rs 280crore for acquiring and co-producing Indian films, including primarily Hindi language films as well as certain Tamil and other regional language films which the company plans to release in fiscal 2011 and 2012. It will utilise the balance proceeds for growth and expansion through organic and inorganic route like acquisitions.
The issue closes Tuesday.
“We have compared Eros International Media with UTV Software Communications and Shree Ashtavinayak Cine Vision as they operate in similar kind of business. Eros had the highest CAGR at 58.3% in revenues among its peers over the past five years. While UTV Software Communications had a CAGR of 33.60% in revenues, Shree Ashtavinayak Cine Vision had a CAGR of 41.7% in revenues during the same period. It has much better EBITDA margins than UTV Software Communications while bit lower than that of Shree Ashtavinayak Cine Vision.
Based on price of Rs 175 (upper end of the price band) and company’s FY 2010 earnings the company will trade at a P/E multiple of 19.44x which is lower than its peers. Also, company looks attractive in terms of P/BV and EV/Sales multiple given that company is expected to grow at a rapid pace as compared to its peers.
The pipeline of movies to be released by Eros over the next two years will contribute to its top line growth as well as enrich its existing content library. The company is in a strong position to maintain a sustained financial performance by leveraging its business model as well as its extensive content library and looks attractive as compared to its peers. Therefore, we recommend SUBSCRIBE to this issue,” the report said.
Eros intends to use up to Rs 280crore for acquiring and co-producing Indian films, including primarily Hindi language films as well as certain Tamil and other regional language films which the company plans to release in fiscal 2011 and 2012. It will utilise the balance proceeds for growth and expansion through organic and inorganic route like acquisitions.
The issue closes Tuesday.
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