SHEMAROO ENTERTAINMENT LTD - ACCUMULATE

Shemaroo Entertainment is relatively a newly listed company in Indian stock exchanges . Company came out with an IPO in last September and issued its shares at a price of Rs.170 . This Mumbai based company is the largest media content synicator in India and own the rights of about 3000 movies ,mainly Hindi and also some regional language movies .Company acquiring contents from its original producers and monetize the same by re-selling it to different media platforms.Shemaroo acquiring its movie rights in two different models - perpetual or aggregated. Perpetual Rights means  the rights to distribute content worldwide for an  unlimited  period across all media. Aggregation method means ,the rights are restricted for fixed period, platforms, or  geography . Company selling these contents to both conventional media platforms like TV Channels , Cable TV Networks..etc and new generation media platforms like Mobile ,Internet..etc. At present , major portion of income is coming from Conventional platforms ,  but the growth rate is far better in new media platforms.For the last nine months growth rate in Conventional platform was 9 % where it was above 40 % in new media segment. This same trend is expected in future too. Government’s and Telecom companies'  efforts to expand the infrastructure for broadband and introduction of modern technologies like 4G ..etc are expected to sharply increase the  Internet penetration in India in the coming quarters . Number of mobile Internet users are expected to grow exponentially in India in the coming years .Such a situation may help the company to achieve faster growth in its media syndication business through new gen platforms like mobile phone and Internet. Recently company tied  up as an official channel partner for You Tube where it is managing more than 30 channels. It is also providing content management services to partners including Reliance Communications Re1 WAP store, and Airtel digital television for an interactive devotional service -iDarshan.

                                                                                          For the nine months ended December 2014 , company reported a top line of Rs.238 Cr and a net profit of Rs.28 Cr . It is expected to complete FY 2014-15 with an EPS of Rs.18 .At the time of IPO , company had a debt of over Rs.100 Cr . It raised Rs.120 Cr through IPO and so far utilised an amount of Rs.40 Cr ( approx) for working capital requirements .An amount of Rs.70 Cr still invested in mutual funds and liquid securities . As per December quarter share holding Promoters are holding about 66 % stake in this company.Recently JP Morgan Chase’s offshore subsidiary  Copthall Mauritius Investment Ltd acquired 4.5 lakhs shares from open market @ Rs.230.Promoters very good relation with major film producers and their more than 30 year experience in this business giving indisputable leadership position for Shemaroo in media content syndication industry .Considering the huge  growth potential of new-gen media going forward , I believe , Shemaroo can improve its already dominant position in this industry. Stock is currently trading around Rs.208 .considering the present  high volatile market situation , suggesting to accumulate it in a staggered manner with a long term view. Stock is listed in both exchanges.

Link to Company Website HERE

Link to latest Investor Presentation HERE 

Disc: It is safe to assume that I have vested interest in Shemaroo