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报告摘要

Eros International (EROS IN) Summary

Core Content and Key Metrics

Eros International (EROS IN) is a company operating in the Indian film entertainment sector with a current share price of INR235 and a target price of INR400, representing a 70% increase. The company's market capitalization is INR21.9B, and its average daily trading volume is USD5M. The company is currently rated as a BUY and has not changed its rating.

The company's financial metrics are as follows:

FYE Mar (INR m)	FY14A	FY15A	FY16E	FY17E	FY18E
Revenue	11,346.6	14,216.0	20,377.4	22,623.6	29,025.0
EBITDA	2,997.5	3,489.5	4,489.4	5,570.4	6,839.3
Core net profit	1,996.9	2,511.2	3,210.2	4,073.1	5,082.2
Core EPS (INR)	22	27	35	44	55
Core EPS growth (%)	29.0	25.2	27.8	26.9	24.8
Core P/E (x)	10.9	8.7	6.8	5.4	4.3
P/BV (x)	1.8	1.5	1.2	1.0	0.8
EV/EBITDA (x)	5.9	11.6	5.4	4.1	3.3
Net debt/equity (%)	18.9	23.5	13.7	4.2	2.5

Market Performance and Investor Sentiment

The stock price of Eros India has experienced a significant decline, with a 45.8% drop over the last month and a 52.5% drop over the last three months. The company's performance relative to the market has also been negative. However, the analyst reiterates a BUY rating, citing the company's strong fundamentals and business position, despite the recent stock price crash.

Recent Allegations and Clarifications

The company has faced allegations of accounting manipulation, particularly regarding:

Rising receivables
Revenue in the UAE geography
Film count
Reconciliation of box-office revenue
Amortization policy
EROS NOW user count

The analyst refutes these allegations, emphasizing that the company's business position and fundamentals remain strong. They also note that the stock price crash was influenced by these concerns, but the company has clarified many of them. The analyst believes that the company is justified in its amortization policy, as it aligns with the demand for older content in India and globally.

Debtor Days and Revenue Validation

Debtor days for Eros India have decreased from 130 days in Mar 2015 to 119 days in 1HFY16, with a guidance to under 100 days by the end of the year. The company's revenue is validated by third-party checks, and the box-office performance of its top films is a significant contributor to its earnings. The analyst confirms that the revenue share of Eros India is in line with its position as one of the top three studios in the Indian film industry.

EROS NOW and Future Growth

The EROS NOW platform has a user base of 30 million, which the company claims to be genuine. The platform is expected to be a significant growth driver, especially with the upcoming launch of original shows and the introduction of the offline download feature. The analyst believes that the EROS NOW app will be a big success in India and overseas, supported by the growing mobile internet user base and the launch of 4G in India.

Management and Strategic Initiatives

The analyst notes that the management has been working to address concerns and improve the company's financial position. The company has clarified its film slate for the next two years, which is fully funded. The analyst also believes that the company may consider reducing related party transactions in the future to avoid controversy.

Conclusion

Despite the recent stock price crash, the analyst believes that Eros India has strong fundamentals and is well-positioned for future growth. The company's business outlook is strong, and it is expected to benefit from the release of big movies and the monetization of EROS NOW. The analyst reiterates a BUY rating, but notes that the target price has been lowered to INR400 due to the near-term overhang. The analyst also notes that the company's debt levels have decreased, and its free cash flow is expected to improve in the coming years.

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