5X Multibagger Stocks as Value Pick · Eros InternatIonal Media · Mar16

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Eros International Media Ltd.

Value Pick : Summary

About Business :

Eros International Media Ltd acquires, co-produces and distributes Indian films across all available formats such as cinema, television and digital new media.

Eros International has built a dynamic business model by combining the release of new films every year with the exploitation of its film library.

Eros International Media Limited (Eros) was incorporated in 1994 as Rishima International Private Limited. It currently has 13 subsidiaries & 2 major shareholders are Eros Worldwide FZ LLC ( Parent company ) & Eros Digital private Ltd, they together hold approx. 74% of total shares as per the last quarter's (Dec15) shareholding pattern.


SWOT Analysis :

Strengths

  • More than 50% of Hindi blockbuster movies are from Eros Media, which is really impressive performance given that India has largest number of movie productions in the World.
  • Talent pool with highest celebrity equity in Bollywood like Salman Khan, Rajnikanth, Akshay Kumar, Amitabh Bacchhan, Hrithik Roshan, Dipika Padukone & list goes on.. are making movies (or made movies ) under Eros Media's production
  • Eros Media's quality & quantity of movies produced are improving year on year & are clearly visible as Indian Movie business is scaling up.
  • Personally I never ever watch Bollywood movies as they are always far fetched story with heroes Acting like god in every hindi movie but Eros know that Majority Indian Movie lovers want to see kuda & illogical hero stunts. Eros is well cashing on these low IQ productions but theek hai.. joh public ko chahiye wohi do & I totally see this approach as strength of Eros.

weaknesses

  • Very high production's upfront costs, ie fees of directors & actors.
  • Even sometimes Eros has to share profits with artists when working on large production projects.
  • Almost every year ESOPs for management in range of 0-2% of total number of outstanding shares. Management ko har saal kuch shares free ke chahiye hi chahiye.
  • Fat paychecks with increase in salaries in range of 10-76% YoY basis plus rent, expenses & extra privileges for top management. Salman khan ki hawai movies ki tarah Eros ki management bhi Larger than life hai
  • Top Shareholders are companies not individuals & companies are linked to Dubai as offshore for Eros. I can't say directly but what the heck... Dubai ki kisi aisi personality ka paisa lga hai jiska direct Naam use nai kiya jaa sakta in Indian authorities ie, ROC or SEBI. I am guessing.
  • Management has sold off 1% in past 3 quarters.
  • Mr. Lulla is always talking ahead of time & never talks about problems or present situation. This guy is always eager to report ahead of time even when not asked for it. His optimism seems like a cover up sometimes.
  • Revenue on Sale of Film rights are recognized immediately on delivery of materials to customer ie, Parent company - Eros Worldwide FZ LLC which is strange as no cash is transferred. This seems like a potential fraud, but given the size of deals is relatively smaller it can be adjusted during valuations.

opportunities

  • In India Movie business is a recession proof business. Logo ke pass khaane ko ho na ho but entertainment jaroor chahiye yha.
  • Create some solid original content like Netflix's House of Cards or Narcos, HBO's Game of Thrones or Entourage & USA Network's Suits. I believe well educated generation craves good content which is yet to be witnessed in India.
    & Yes I am huge fan of mentioned original series
  • Expanding to regional languages since large chunk of audience craves for regional customized entertainment.

threats

  • Entertainment industry in India with dominance in Hindi sees no threat of other International languages.
  • No innovation yet to topple movies to something better in entertainment in India yet.
  • I can safely say with points mentioned above that Eros Media operates in a Threat Free industry.

Business Verdict :

With some accounting adjustments leading to a corporate governance issue between the parent company ie, Eros Worldwide FZ LLC & Eros Media there has been a steep crash & thanks to Stock Brokers for directing a great amount of Sattebaaji in this stock leading to ghar bikne wali halat for many sattebaajs.

Movies are lifeline of Indian people in many ways & some might say that they are mirror of our society. Thanks to Stock brokers for recommending Eros stock for sattebaaji & creating chaos for some n opportunities for few .

Eros International Media is a Multibagger stock in India available undervalued. ValueGuyz Eros Media is a definite value pick to consider for your research.


Official Website

Quality Analysis
Value Matrix

What are Value Picks ?

Value picks are stocks of companies that are believed to be undervalued at NSE or BSE. It is an outcome of huge sattebaaji directed by Stock brokers in that stock making Markets overreact to good and bad news, resulting in stock price movements that do not correspond with the company's long-term business or fundamentals.

You can learn Value Pick Multibagger Stock course & start your own research in depth. After completing the Value Pick Multibagger Stock course You have to apply methods & circle of competence on your researched Value Picks.

Is Value Pick Tax Free ?

YES, Profit arising from holding Equity shares for 1 Year or more is covered under Long Term Capital Gain ( LTCG) as per Income Tax Act 1961 ( Section 54 )

regards,

jasmeet singh

Founder & Investor

SEBI Regd.(INH100004951)

Jasmeet Singh

About me :

Currently managing assets of 5 Crore+ & still sleep like a baby every night because Valueguyz makes life simpler.

I am passionate about 3 things in my life Financial System, Fitness & Photography

I got introduced to Financial system through Forex Trading back in 2007 during my 3rd Year of Engineering & It was too complex yet magnificent. Officially I entered Indian Stock Market in early 2008 at the very beginning of Global Financial Crisis, but what the hell did I know for me it was the last semester & time to get serious about my passion ie, Counter Strike

Legends :

RoCE : Return on Capital Employed (Effective)

PAT(Avg.) : Net Profit after tax ( Average )

CMP : Current Market Price

MoS : Margin of Safety

DISCLAIMER

This analysis is my personal opinion shared on public media (Blog) & is not a recommendation of any sort in any manner. I am currently not registered with SEBI in any capacity but in process of being a registered Research Analyst with SEBI. I have no financial interest in aforesaid company & don't hold any stock on the date of writing this post.