EROS INTERNATIONAL MEDIA LIMITED – BUY

Scrip Code – 533261 / EROSMEDIA

CMP – 221.95      BUY AT CURRENT LEVEL.

Medium to long term target -  257-265

• Market capital – Rs 2,105.26 Cr
• Total shares – 9,19,73,190 shares
• Promoters – 6,88,33,290 shares ( 74.84% )
• Total public holdings – 2,31,39,900 shares ( 25.16% )
• Book value – 96.59 Rs               Face value – 10.00 Rs
• Eps – 12.34 Rs                              Dividend – 15%
• P/E – 18.54 Times                       Ind P/E – 34.02
• Total debts – 384.08 Cr             Enterprise value – 2,326.53 Cr

EROS INTERNATIONAL MEDIA:

EROS INTERNATIONAL MEDIA was incorporated as in 1977 and is based in Mumbai, India. It was started by Mr. Arjan Lulla. It was earlier known as Rishima International Private Ltd and changed its name to Eros Multimedia Private Limited on July 25, 2000. Company again changed its name to Eros International Media Private Ltd on Nov 20, 2008, On Nov 18, 2009 company again changed its name to the present Eros International Media Ltd. It is subsidiary of Eros Worldwide FZ Llc.

Eros International Media Limited operates in the media and entertainment sector in India and internationally. It engages in sourcing content through acquisition, co-production, or production; the theatrical distribution network operation; licensing films for cable, satellite, and terrestrial television; and the distribution of Tamil film content in Western Europe through its own television station.

The company came out with an IPO of about 2 Cr shares in September 2010 at Rs. 175 totaling to Rs. 350 Crs at the price of Rs. 175 and got listed at Rs. 213.35 on 6 Oct 2010. The purpose of the issue was to acquire and co-produce Indian films. The company also distributes content through physical formats, such as DVD, VCD, and Blu-rays, as well as the digital mediums comprising Video On Demand, Direct To Home, Internet, mobile, and in-flight entertainment; and involved in music publishing and distribution activities. In addition, it provides production planning and visual effects services for films; engages in the acquisition, production, and distribution of Tamil films worldwide; and involved in cable or DTH licensing, as well as trading and exporting international film rights. The company owns approximately 1,100 films comprising Hindi, Tamil, and other regional languages & has aggregated rights to over 1,900 films plus additional 700 films for which the company holds digital rights only. In the year 2006, Eros International Plc, the holding company of the Eros Group, became the first Indian company to list on the Alternative Investment Market (AIM) of the London Stock Exchange. On November 13, 2013, Eros International got listed on New York Stock Exchange at $11.10 a share, post NYSE listing, the company has cancelled its shares from Alternative Investment Market (AIM) london.

Eros International PLC, is the Ultimate Holding Company based at Isle of Man, Eros Worldwide FZ-LLC is the holding company based in UAE and the subsidiaries include - Eros International Films Pvt Ltd, Copsale Ltd, Big Screen Entertainment Pvt Ltd, EyeQube Studios Pvt Ltd, EM Publishing Pvt Ltd, Eros Animation Pvt Ltd, Eros Digital Pvt ltd, Eros International Ltd (UK), Digicine PTE Ltd, Ayngaran International Ltd (Isle of Man). It distributes content through retail outlets and it’s Website under the Eros and Ayngaran labels. Eros International Media can be locally compared with PVR Ltd, Prime Focus ltd, Reliance Broadcast Network Ltd, Balaji Telefilms ltd, Media Matrix Worldwide Ltd, Shree Ashtavinayak Cine Vision Ltd, Tips Industries Ltd and globally compared with Walt Disney Co of US California, Time Warner Inc of USA, IG Port Incorporated of Japan, Twenty First Century Fox, Inc of New York, Lions Gate Entertainment Corp of California, UTV Media PLC of UK, Dreamworks Animation Skg Inc of California.

KEY FINANCIALS	FY13	FY14	FY15E	FY16E
SALES (₹ Crs)	1,068.00	1,135.00	1,344.00	1,490.00
NET PROFIT (₹ Cr)	154.00	200.00	223.00	253.00
EPS (₹)	16.80	21.70	24.20	27.50
PE (x)	11.30	8.80	7.90	6.90
P/BV (x)	1.80	1.40	1.20	1.00
EV/EBITDA (x)	8.70	6.60	6.00	5.60
ROE (%)	15.70	16.50	15.60	15.00
ROCE (%)	15.90	18.50	18.00	17.30

CAPITAL FIRST LIMITED - INVEST FOR LONG TERM

If we prepare an industry wise list of listed companies, no doubt financial service sector will be at the top by number. At the same time if the list is based on quality of promoters the same sector will be always at the bottom. Lot of bogus paper companies without any business operations are listed in our stock exchanges especially in bse from this sector. So selecting a quality company from this sector warrant a close screening of its promoter’s integrity, executive’s quality and the standard and professionalism of its governing board etc...

Capital first limited  ( formerly known as future capital holdings) came out with an ipo in 2008 and allotted shares at a price of rs.765 per share. This company was originally promoted by future group of biyani’s. Later future group had lot of debt related issues mainly in their flagship – pantaloon retail business. Due to this ,future group decided to exit from this company and same acquired by us based private equity investment firm warburg pincus.

Since this company’s business is simple and similar in line with other nbfc’s, i don’t think much explanation is needed about its business side. Why this company is special to me and what distinguishing it from other companies from the same sector is –the people behind it. Before looking into this important factor just few lines about its business- company is an nbfc offering personal loan, loan for consumer durables, gold loan, two wheeler loan, loan against property and distributing various insurance products. Capf is present in 40 cities through its 164 branches.

As on 31march 2014, assets under management (aum) of company increased to rs.97 billion from rs. 75.10 billion Compared with just previous year and capital adequacy ratio is healthy at 24 %. Due to management’s prudent decision to concentrate in retail lending, its gross npa is just 0.45% and net npa is only 0.08% . This is one of the best among any listed nbfc’s. Capf recently received license to start housing finance business through its subsidiary capital first home finance private limited and it is expected to contribute from this year itself.

The Real Differentiators

As i mentioned at the beginning itself, while selecting a stock from nbfc sector for investment purpose there is lot of options in this space. But if we look in detail, many of them are only for name sake and quality wise very few companies deserve a serious look. Quality of people behind any company will surely reflect in quality of business. So let us look behind the curtain to get an idea about the people behind it.

First of all, for a business like nbfc , promoters ability to infuse funds is core point for business growth. CAPF is currently owned by one of world’s largest and most reputed us based private equity investment firm warburg pincus through its affiliate cloverdell investment ltd. Warburg pincus’ aum is about $48 billion and invested in more than 700 companies in 35 countries. I think, with such a strong hand behind it , fund raising for expansion is not at all an issue for capf. Promoter’s currently holding about 72% stake in capf. In addition to this, recently hdfc standard life insurance company ltd infused rs.50 cr by subscribing a 4% stake in this company.

Conclusion

After some difficult period under the future group, CAPF is now moving to the high growth path. Company reported an income from operations of rs.1067 cr and a net profit of rs.53 cr in f.y 2014.

In a recent interview md of the company mentioned that the company's profit will expand substantially in f.y 2015 compared with what it achieved in f.y 2014. In nut shell – there is everything in this company to emerge as one of the most successful nbfc in future and capital first is my top pick and a must buy from nbfc sector for any small/mid cap portfolio. Stock is listed in both exchanges and trading around rs. 204.

Suggested Reading

        1. LatestPrice, Charts & More

        

        2. LatestAnnual Report F.Y 2013-14

Highlights of Budget 2014

 

 

• Every taxpayer gains Rs 416 per month or Rs 4,992 per year 

• Personal income tax limit for individuals aged below 60 years raised to Rs 2.5 lakh

• Deduction limit under section 80 C raised to Rs 1.5 lakh

• Excise duty on cigarettes raised in range of 11-72 per cent

• Annual PPF ceiling hiked to Rs 1.5 lakh

• Home loan interest exemption hiked to Rs 2 lakh

• No tax for income up to Rs 3 lakh for senior citizens

• LCDs, LED TVs to get cheaper

• Service tax imposed on AC bus travel

• Readymade clothes, cosmetics get dearer

• Solar lamps to get cheaper

• Additional excise duty of 5 per cent on aerated drinks

• Excise duty on footwear reduced

• No custom duty on CRT TV

• Wage ceiling for EPFO hiked to Rs 15,000 cr

• Tax saving of Rs 5,000 after PPF ceiling hike

• Small savings instrument for girlchild

• New sops for infra loans

• Seven industrial smart cities to be set up

• Rs 237 crore for cleaning of rivers

• New cess on imported electronics goods

• Rs 2,000 cr for Ganga conservation project

• New industrial clusters to be set up on golden quadrilateral

• Education cess for all taxpayers continues at 3 per cent

• Tax proposed on the service provided by radio taxis

• No changes in corporate tax rates

• Basic tax exemption limit of Rs two lakh is likely to be extended by Rs 1 lakh, giving relief to salaried taxpayers.

• Limit u/s 80C raised to Rs 1.5 lakh from Rs 1 lakh

• PPF Annual ceiling to be hiked from Rs 1,00,000 to Rs 1,50,000

•  Interest cap on Self-occupied houses raised to Rs 2 lakh from Rs 1 lakh

•  Income tax exemption limit for senior citizens raised to Rs 3 lakh frmRs 2.5 lakh

•  No change in tax rate, exemption limit raised form Rs 2 lakh to Rs 2.5 lakh for general assessees

• Tobacco products to cost more. Excise duty increased b/w 11-72%.

• Indirect Tax proposals to yield additional revenue of Rs 7,000 cr

• To cut excise duty on packaging machinery to 6%

•  To cut excise duty on food processing to 6% from 10%

•  No change in rules on retrospective taxation; all retro tax cases will be scrutinised buy high level commission

• Clean energy cess increased from Rs 50/ tonne to Rs 100/tonne.

• Additional 5% excise tax to be levied on aerated drinks with added sugar (cold drinks). Tobacc products also to get costly as excise duty hiked to 72%

• Government announces reduction in excise duty for specified food package industry from 10% to 6%.

• Excise duty on footwear reduced from 12% to 6%

• Government announces measures to encourage manufacture of LCD/LED panels of TVs.

• Housing loan rebate to raised from Rs 1.5 lakh to Rs 2 lakh.

• Net effect of direct tax proposals is revenue loss of Rs 22,200 crore.

• Government proposes to increase investment limit under Section 80C from Rs 1 lakh to Rs 1.5 lakh.

• Tax exemption limit for small and marginal, and senior tax payers changed from Rs 2.0 to Rs 2.5 lakh For senior citizens,

• No tax for income up to Rs 3 lakh per annum.

• No changes in tax rate.

What goes up:

• Cigarettes
• Cigars
• Tobacco products
• Gutkha and pan masala
• Jarda scented tobacco
• Aerated drinks containing added sugar
• Some telecom products
• Radio Taxi
• Imported electronic products
• Portable X-ray machines
• Half cut/broken diamonds 

What goes down

• Mobile phones
• Imported computers components
• Smart cards
• Footwear
• Colour picture tubes
• Small LCD TV

 

Smart Long Term Investment

 Public Provident Fund Is The Most Popular & favorite Tax Saving Scheme. Interest Earned on PPF is tax Free.

 

As This scheme is governed by Government of India,It Is Totally Safe Investment.

 

PPF Scheme is For a Period of 15 Years. Minimum Investment required in PPF Account is Rs. 500/- Per Year & Maximum 1 Lac Rs. Per Year.

 

Interest Rate of PPF 

The Interest on PPF is No Longer Fix, Every Year Government Declare Interest Applicable On PPF.For The Fiscal Year 2013-14,Ideal investment option for both salaried as well as self employed classes.The Government will Pay 8.7%.

Interest on Investment is Compounded Annually and its Credited at The End of the year.

 

 

• Ideal investment option for both salaried as well as self employed classes.

   

• Investment up to INR. 1,00,000 per annum qualifies for IT Rebate under section 80 C of IT Act.
  
   

• The rate of interest on the subscriptions made to the fund on or after 01.12.2011 and balances at credit of the subscriber in the existing PPF account shall bear interest at the rate of eight point eight per cent (8.80%) per annum.
  
  

• Loan facility available from 3rd financial year upto 5th financial year. The rate of interest charged on loan taken by the subscriber of a PPF account on or after 01.12.2011 shall be 2% p.a. However, the rate of interest of 1% p.a. shall continue to be charged on the loans already taken or taken up to 30.11.2011.
  
  

• Withdrawal permitted from 6th financial year.
  
  

• Free from court attachment.
  
  

• An individual cannot invest on behalf of HUF (Hindu Undivided Family) or Association of persons.

An example is shown below describing, if an individual invest Rs 1,00,000/ year, then in 15 years he will have an amount of Rs 30.64 lakhs. The interest portion is completely tax free. Principal portion can be claimed as a deduction under Sec 80C.

 

 

Year	Principal	YoY investment	Interest	P+I
1	1,00,000	-	8,700	1,08,700
2	1,08,700	1,00,000	18,157	2,26,857
3	2,26,857	1,00,000	28,436	3,55,293
4	3,55,293	1,00,000	39,610	4,94,903
5	4,94,903	1,00,000	51,756	6,46,660
6	6,46,660	1,00,000	64,959	8,11,619
7	8,11,619	1,00,000	79,311	9,90,930
8	9,90,930	1,00,000	94,911	11,85,841
9	11,85,841	1,00,000	1,11,868	13,97,709
10	13,97,709	1,00,000	1,30,300	16,28,009
11	16,28,009	1,00,000	1,50,337	18,78,346
12	18,78,346	1,00,000	1,72,116	21,50,462
13	21,50,462	1,00,000	1,95,790	24,46,252
14	24,46,252	1,00,000	2,21,524	27,67,776
15	27,67,776	1,00,000	2,49,496	31,17,273

 

So If you Invest Rs. 1,00,000/- Every Year In PPF, It will Double Your Money In 15 Years without paying any Tax on That.......