Shemaroo to gain from fast-growing internet and mobile content segments

The Shemaroo Entertainment stock gained 13% in a month even as the benchmark Nifty lost 15%. Investors are hoping that the company, which holds selling and distribution rights to over 3,000 Indian movies and videos, will gain from the fast-growing internet and mobile content segments.

The new media division of the company generates revenue by offering the content across media platforms such as smartphones, YouTube, telecom companies and through the content deals with video-on-demand platforms such as HOOQ and Spuul.

Shemaroo has various revenue models such as pay per transaction, subscription and free-to-consumer content.

It must be noted that YouTube views for Shemaroo jumped to 100 million per month in the December 2015 quarter in comparison with 90 million in the September 2015 quarter.

The share of new media in Shemaroo’s revenue has quadrupled to 16.7% in the past five years. The company earned Rs 45.8 crore in revenue from the segment in the first nine months of FY16 versus Rs 6.7 crore in FY11. In the same period, revenue from traditional media, which include sale and rent of movie titles, grew to Rs 227 crore. Due to rising proportion of new media in the revenue, the operating margin too, expanded to 27.6% in the nine months to December 2015.

The entry of over-the-top content platforms such as Netflix augurs well for Shemaroo given its exclusive rights to entertainment content. Also, internet consumption is expected to double by FY19 from the current 2 GB per month. Shemaroo will be among the few entertainment firms which are expected to benefit from this.