Eros International
BUY/HOLDEros International, the producer and distributor of Bollywood films, has failed to shine in share price terms, although its financial progress makes compelling viewing.
Recently unveiled financials to March show the company grew sales by 70% to $113m (£57m) last year, from which pre-tax profits grew by almost 50% to $45.5m – in addition, a healthy $79.8m of cash was generated.
Last year, Eros released 16 of its 18 films globally and enjoyed growth in both its television and home entertainment divisions. Moreover, growth prospects remain buoyant, both in the Indian economy and wider world, with revenues having risen by 39% in the US and doubled in Europe.
Chairman and chief Executive Kishore Lulla also has high hopes for collaborations which have been signed with Hollywood giant Sony Pictures and with the late film director Robert Altman’s Lionsgate company to re-dub its 13,000-strong film library as well as its forthcoming titles for the Asian market. He also takes confidence from increasing barriers to entry in Eros' chosen market and rising cinema ticket prices.
Trading on prospective earnings multiples of 10.3 and eight times – based on house broker WH Ireland’s 26.9p and 34.9p estimates for this year and next – Eros, an erstwhile GCI recommendation at 400p, looks dramatically oversold. Buy/hold.
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Market cap: £319.9m
PE Forecast: 10.3
Share price: 277.50p
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