Is Shemaroo Entertainment a solid growth stock? - The numbers tells it is

02-10-2014 • About Shemaroo Entertainment ($SHEMAROO) • By InTwits

Shemaroo Entertainment is a growth stock in Movies & Entertainment industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.

Growth story

Shemaroo Entertainment showed fast growth in the last financial year. The company's revenue surged on 23.2% in FY2014. EBITDA also increased: 11.9% for the same period.

If we look for the longer period Shemaroo Entertainment showed fast revenue growth of 18.7% from FY2011 to FY2014 annually. EBITDA surged on 22.9% from FY2011 to FY2014 annually.

Shemaroo Entertainment ($SHEMAROO) financials for the last 5 years

mln. INR	FY2010	FY2011	FY2012	FY2013	FY2014
Revenue	3,860	1,582	1,820	2,147	2,646
Revenue growth, %		-59.0%	15.0%	18.0%	23.2%
SG&A, %
EBITDA	196	354	517	587	657
EBITDA growth, %		80.9%	46.0%	13.7%	11.9%
EBITDA margin, %	5.07%	22.4%	28.4%	27.3%	24.8%
Net Income	3	136	209	234	273
Net Income margin, %	0.0820%	8.62%	11.5%	10.9%	10.3%

CAPEX	7	18	42	20	19
CAPEX/Revenue, %	0.185%	1.15%	2.30%	0.927%	0.713%
Debt	1,062	961	928	1,102	1,512
Cash	186	70	65	11	9
Net Debt/EBITDA	4.5x	2.5x	1.7x	1.9x	2.3x

ROIC, %	8.6%	17.2%	23.5%	22.9%	21.0%
ROE, %	0.4%	16.2%	19.3%	17.1%	16.9%

Profitability and return on investment

Despite revenue growth EBITDA margin declined slightly from 27.3% in FY2013 to 24.8% in FY2014. In the longer period the company's EBITDA margin surged on 2.40 pp from 22.4% in FY2011 to 24.8% in FY2014.

Shemaroo Entertainment shows attractive ROIC at 21.0% for the last 12 months which assumes stable development model. Three years ago it was a bit lower at 17.2%. It's average level of ROIC for the last three years was 22.4%.

The company showed decline of 0.600 pp from 10.9% to 10.3% in FY2014. In the last 3 years the company's Net Income margin surged on 1.70 pp from 8.60% in FY2011 to 10.3% in FY2014.

Shemaroo Entertainment operates at ROE of 16.9%. For the last three years the average ROE was 17.8%.

Capital expenditures (CAPEX)

The company's CAPEX/Revenue was 0.713% in FY2014. Shemaroo Entertainment's CAPEX/Revenue dropped on 0.438 pp from 1.15% in FY2011 to 0.713% in FY2014. It's average CAPEX/Revenue for the last three years was 1.31%.

Leverage (Debt)

Shemaroo Entertainment has medium debt level at 2.3x Net Debt/EBITDA to maintain high growth. If we look for the longer period leverage decreased on 0.23x from 2.52x in FY2011 to 2.29x in FY2014.

Peers in Movies & Entertainment

Below we provide Shemaroo Entertainment benchmarking against other companies in Movies & Entertainment industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %

Top 5
	FY2010	FY2011	FY2012	FY2013	FY2014
Sri Adhikari Brothers Television Network ($SABTN)		-56.9%	167.5%	22.2%	11.9%
Prime Focus ($PFOCUS)		-72.5%	53.5%	-1.3%	10.8%
Mukta Arts ($MUKTAARTS)		47.0%	5.0%	22.4%	8.2%
Eros International Media ($EROSMEDIA)		-57.9%	33.5%	13.1%	6.2%
Dq Entertainment (International) ($DQE)		28.7%	9.3%	1.0%	4.5%

Median (6 companies)		-56.9%	16.9%	14.6%	7.2%
Shemaroo Entertainment ($SHEMAROO)		-59.0%	15.0%	18.0%	23.2%

Top companies by EBITDA margin, %

Top 5
	FY2010	FY2011	FY2012	FY2013	FY2014
Eros International Media ($EROSMEDIA)	18.3%	57.9%	61.2%	65.7%	67.6%
Dq Entertainment (International) ($DQE)	39.0%	36.4%	41.8%	48.8%	40.2%
Sri Adhikari Brothers Television Network ($SABTN)	9.2%	2.1%	7.5%	24.7%	27.5%
Saregama India ($SAREGAMA)	-4.5%	3.3%	12.3%	8.6%	9.8%
Mukta Arts ($MUKTAARTS)	18.8%	9.2%	6.4%	4.0%	1.0%

Median (5 companies)	9.1%	9.2%	15.0%	24.8%	27.5%
Shemaroo Entertainment ($SHEMAROO)	5.1%	22.4%	28.4%	27.3%	24.8%

Top companies by CAPEX/Revenue, %

Top
	FY2010	FY2011	FY2012	FY2013	FY2014
Sri Adhikari Brothers Television Network ($SABTN)	25.9%	119.1%	28.9%	5.1%	9.4%
Saregama India ($SAREGAMA)	0.7%	4.7%	2.7%	3.4%	4.3%
Eros International Media ($EROSMEDIA)	0.1%	77.5%	56.1%	0.1%	0.0%
Dq Entertainment (International) ($DQE)	18.5%	78.6%	5.5%	2.0%	0.0%

Median (4 companies)	4.3%	45.2%	8.1%	3.4%	2.1%
Shemaroo Entertainment ($SHEMAROO)	0.2%	1.2%	2.3%	0.9%	0.7%

Top companies by ROIC, %

Top 5
	FY2010	FY2011	FY2012	FY2013	FY2014
Eros International Media ($EROSMEDIA)	23.8%	21.0%	18.4%	15.2%	17.6%
Picturehouse Media ($PICTUREHS)		23.0%	15.6%	17.3%	16.9%
Sri Adhikari Brothers Television Network ($SABTN)		-4.8%	-4.4%	7.1%	10.6%
Saregama India ($SAREGAMA)	-8.4%	-10.6%	4.1%	1.7%	8.2%
Dq Entertainment (International) ($DQE)		9.1%	9.4%	9.3%	6.2%

Median (13 companies)	5.4%	9.1%	2.1%	7.3%	8.2%
Shemaroo Entertainment ($SHEMAROO)	8.6%	17.2%	23.5%	22.9%	21.0%

Top companies by Net Debt / EBITDA

Top 5
	FY2010	FY2011	FY2012	FY2013	FY2014
Picturehouse Media ($PICTUREHS)		-1.1x	6.2x	3.7x	3.4x
Sri Adhikari Brothers Television Network ($SABTN)	4.8x	112.5x	16.1x	3.5x	2.5x
Prime Focus ($PFOCUS)	3.7x	2.5x	1.9x	3.5x
Mukta Arts ($MUKTAARTS)	2.0x	3.8x	3.2x	3.3x	0.0x
Saregama India ($SAREGAMA)		10.1x	2.4x	3.1x	0.2x

Median (10 companies)	0.6x	2.1x	2.4x	2.7x	0.4x
Shemaroo Entertainment ($SHEMAROO)	4.5x	2.5x	1.7x	1.9x	2.3x

Shemaroo Entertainment stock price chart

Shemaroo Entertainment financials

mln.	FY2010	FY2011	FY2012

Revenue	3,860	1,582	1,820
EBITDA	195.6	353.8	516.5
Net income	3.166	136.3	209.4
CAPEX	7.151	18.226	41.825
Debt	1,062	961.3	928.2
Cash	185.8	69.631	65.423

About Shemaroo Entertainment

Shemaroo Entertainment Limited operates as an integrated media content house in India. The company is engaged in the aggregation, production, and co-production of cinematograph films, dramas, etc.; and distribution of rights of films and dramas worldwide through various medium; and exploiting rights of the content through distribution avenues, such as Internet protocol television, video on demand, and mobile platforms. It offers various types of content, which include films, music, devotional, kids/animation, motivational/spiritual, classic television serials, and health related content. The company also provides digital content and services, including ringtones, caller ring back tones, video clips, imagery content, games, applications, celebrity chats, text content, voice-based, and other services. Shemaroo Entertainment Limited distributes the content through various media, such as satellite, terrestrial, and cable television; new media platforms consisting of mobile, Internet, direct to home, and other applications; home entertainment, including Blu Ray, DVDs, and VCDs; and other media. In addition, it offers digital post-production services consisting of digital intermediate processing, digital restoration, 4K spirit data scanner telecine transfer, scanning and archiving digitally, high definition and standard definition post production, Blu Ray/DVD and VCD authoring, and format conversion. Further, the company provides content management solutions to its partners. Shemaroo Entertainment Limited was founded in 1962 and is based in Mumbai, India.