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DSIJ Intelligence / 17 Sep 2010

Eros International Media (EIML), part of the Eros Group is tapping the capital market with an initial public offer of equity shares of Rs 10 each to raise Rs 350 crore. The price band has been fixed between Rs 158 and Rs 175 per equity share. EIML primarily sources content through third parties, production and co-productions. EIML also engage in end-to end distribution of Indian film content and seeing the huge opportunity in VFX, the company started its own VFX facility in 2007. Looking at the growth of Indian film industry, company’s growth and attractive valuation at which issue is available we ask our readers to subscribe to the issue.

IPO Analysis:

Eros International Media:
Eros International Media (EIML), part of the Eros Group is tapping the capital market with an initial public offer of equity shares of Rs 10 each to raise Rs 350 crore. The price band has been fixed between Rs 158 and Rs 175 per equity share. Bids can be made for a minimum of Rs 40 equity shares and in multiples of 40 thereof. The issue will result in a fresh issue of 2.00 crore to 2.22 crore equity shares that will form 21.9 per cent to 23.7 per cent of the post-issue equity base at lower and upper price band respectively.

EIML primarily sources content through third parties, production and co-productions. EIML also engage in end-to end distribution of Indian film content and seeing the huge opportunity in VFX, company started its own VFX facility in 2007. EIML has one of the largest movie libraries comprising of over 1,000 film titles which are consistently updated with new film releases and title acquisitions. The company achieves revenue diversification by monetizing its library content across different formats which include TV, DVD, IPTV, and Video on Demand among others. The funds raised through this issue will be primarily be utilised for acquiring and co-producing Indian films including at least four Hindi films and Marathi films each and about three Tamil films to be released across FY11 and FY12. The company has plans to release over 50 Tamil films and two Marathi films in FY2011. The Hindi films include ‘RA ONE’, ‘Golmaal 3’ and ‘Anjaana Anjaani’.

Coming down to the company’s financials, during FY06-10 EIML’s topline has grown at 58 per cent CAGR whereas its bottomline has grown at a whopping 158 per cent in the same time. When we talk of valuation we find that issue is attractively priced compared to its peers. At the lower and upper ends of the issue price, the stock is offered at 18.0 times and 19.4 times FY2010 earnings compared to 42 times of UTV software communications and 93 times of Shree Ashtavinayak Cine Vision. Even if we take market cap to sales EIML is available at 2.49 times at upper price band compared to 3.4 times at which UTV Software communications is available. Looking at the growth of Indian film industry, company’s growth and attractive valuation at which issue is available we ask our readers to subscribe to the issue.

Shareholding Pattern	Pre Issue	Post issue*
Promoter group	100	78.1
Others	-	-
Public	-	21.9
Total	100	100
*Calculated on the basis of upper price band

ISSUE INFORMATION
Issue Opens On	17-Sep-10
Issue closes on	21-Sep-10
Number Of shares (crores)*	2.00
Price Band (Rs)	158-175
Issue route	Book Building
Promoters	Eros International plc & Eros Worldwide FZ LLC
Post issue Equity (Crores)*	9.1
Minimum Bid	40
Lead managers	Enam, Kotak, RBS
Listing	BSE, NSE
Reail Portion (crores)*	0.60
QIB Portion (crores)*	1.20
Non Institutional (crores)*	0.20
*Calculated on the basis of upper price band

Financials	FY10 Rs/Cr
Revenue	640.90
Total Expenditure	529.90
Operating Profit	111.00
Other Income	14.70
Interest and Finance charges	9
Net profit/(loss) after tax	82.80