Published on 11/01/2018 2:39:46 PM | Source: Arihant Capital Markets Ltd

Neutral Shemaroo Entertainment Ltd For Target Rs.417.00 - Arihant Capital

Performance Analysis:

The company has shown growth in performance for the quarter with revenue increasing at 12.7% YoY and 23.8% sequentially on standalone front. On consolidated front the revenue grew by 18% YoY.

Revenue from digital media continued the upward curve with 42% growth rate when compared to corresponding quarter of previous year. Share of new media to revenue grew to 25% vs 21% in corresponding quarter of previous year.

Traditional media grew by 13.2% YoY for the quarter under review and sequentially the revenue growth grew by 35.7%. Share in revenue for traditional media stood at 75% vs 79% YoY and 72% sequentially.

Operating margins for the company stood steady owing to the higher expenditure . EBITDA margin declined to 25% for the quarter under review against 29.8% in the corresponding quarter of the previous year & 33.5% sequentially. Profitability for the company deteriorated on standalone basis in comparison of both YoY and sequential basis. Net profit for the quarter under review came in at Rs 14.7 cr vs Rs 16.8 cr in the corresponding quarter of the previous year and Rs.16.9 cr on sequential basis.

On consolidated front revenue for the quarter came in at Rs. 134 crore, registering 18.3% YoY growth and net profit grew by 23.8% YoY to Rs 19 cr.

Some highlights for quarter:

1. Company licensed and monetized the live feed of Lalbaugcha Raja on Mobile, DTH & Internet platforms.

2. Company signed a content deal with Etisalat.

3. Crossed 2 Bn cumulative views on their YouTube channel ‘ShemarooENT’.

4. Crossed 5 Mn subscribers on their YouTube channel ‘FilmiGaane’.

Valuation: The company has positive outlook towards growth in media sector and plans to expand in digital media business. At CMP of Rs 403 company trades at a P/E multiple of 12.6(x) its FY 19 estimates. We have valued the stock at its FY 19E forward P/E of 13(x) and arrived at a fair value of Rs 417 per share. We have “NEUTRAL” rating on the company.

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