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IDBI Capital
Eros International (Buy)
CMP: ₹433.80
Target: ₹616
We reinitiate coverage on Eros International Media (EROS) and recommend ‘buy’ with street high target price of ₹616 based on PER of 15x FY17E. We believe that the ecosystem for monetisation of movie content in getting stronger across the value chain — growth in multiplexes, digitisation of television, emergence of digital platforms and consolidation among movie studios.
EROS is strongly positioned to benefit from these given its diversified studio model, vast movie library and strong digital presence with EROSNOW having 14m subs in India.
We are bullish about EROS’ ability to deliver sustainable growth. It has started FY16E with a blockbuster — ‘Tanu Weds Manu Returns’ and has a strong movie slate for FY16-17E. We expect strong theatrical performance and growth in TV satellite rights & catalogue sales to drive EPS CAGR of 24 per cent each over FY15-17E. We expect blockbuster performance of ‘Bajrangi Bhaijaan’ to be near-term catalyst for the stock.
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