Shemaroo Entertainment reports 50.1% Net Income growth and 21.7% Revenue growth

06-05-2015 • About Shemaroo Entertainment ($SHEMAROO) • By InTwits

Shemaroo Entertainment reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

Shemaroo Entertainment has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.2%. At the same time it's a lot of higher than industry average of 15.7%.
CAPEX is quite volatile: 22.2 in FY2015, 18.9 in FY2014, 19.9 in FY2013, 41.8 in FY2012, 18.2 in FY2011
The company has highly profitable business model: ROIC is at 21.8%
It operates with medium-size leverage: Net Debt/EBITDA is 1.2x while industry average is 1.3x

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Shemaroo Entertainment ($SHEMAROO) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	1,582	1,820	2,147	2,646	3,219	21.7%
EBITDA	354	517	587	657	871	32.6%
Net Income	136	209	234	273	409	50.1%
Balance Sheet
Cash	70	65	11	9	25	166.5%
Short Term Debt	829	877	1,099	1,411	1,057	-25.1%
Long Term Debt	132	51	2	101	3	-96.8%
Cash flow
Capex	18	42	20	19	22	17.4%
Ratios
Revenue growth	-59.0%	15.0%	18.0%	23.2%	21.7%
EBITDA growth	80.9%	46.0%	13.7%	11.9%	32.6%
EBITDA Margin	22.4%	28.4%	27.3%	24.8%	27.1%	2.2%
Net Income Margin	8.6%	11.5%	10.9%	10.3%	12.7%	2.4%
CAPEX, % of revenue	1.2%	2.3%	0.9%	0.7%	0.7%	-0.0%
ROIC	17.2%	23.5%	22.9%	21.0%	21.8%	0.9%
ROE	16.2%	19.3%	17.1%	16.9%	16.6%	-0.3%
Net Debt/EBITDA	2.5x	1.7x	1.9x	2.3x	1.2x	-1.1x

Revenue and profitability

Shemaroo Entertainment's Revenue surged on 21.7% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 16.0 pp from -6.3% to 9.7% in FY2015.

Net Income marign increased on 2.4 pp from 10.3% to 12.7% in FY2015.

Capital expenditures (CAPEX) and working capital investments

Shemaroo Entertainment's CAPEX/Revenue was 0.69% in FY2015. The company's CAPEX/Revenue decreased slightly on 1.6 pp from 2.3% in FY2012 to 0.69% in FY2015. It's average level of CAPEX/Revenue for the last three years was 0.78%.

Return on investment

The company operates at high and attractive ROIC (21.84%) while ROE is a bit lower (16.64%). ROIC increased slightly on 0.85 pp from 21.0% to 21.8% in FY2015. ROE showed almost no change in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 1.2x and Debt / EBITDA is 1.2x. Net Debt / EBITDA dropped on 1.1x from 2.3x to 1.2x in FY2015. Debt dropped on 29.9% in FY2015 while cash surged on 166% in FY2015.

Valuation

Shemaroo Entertainment's trades at EV/EBITDA 7.2x and P/E 12.8x while industy averages are 10.5x and 26.1x. Shemaroo Entertainment's EV/(EBITDA-CAPEX) is 7.4x with the industry average at 4.7x.

Appendix 1: Peers in Movies & Entertainment

Below you can find Shemaroo Entertainment benchmarking vs. other companies in Movies & Entertainment industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
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)		15.0%	18.0%	23.2%	21.7%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Eros International Media ($EROSMEDIA)	57.9%	61.2%	65.7%	67.6%
Dq Entertainment (International) ($DQE)	36.4%	41.8%	48.8%	40.2%
Sri Adhikari Brothers Television Network ($SABTN)	2.1%	7.5%	24.7%	27.5%
Saregama India ($SAREGAMA)	3.3%	12.3%	8.6%	9.8%
Mukta Arts ($MUKTAARTS)	9.2%	6.4%	4.0%	1.0%
Median (5 companies)	9.2%	15.0%	24.8%	27.5%
Shemaroo Entertainment ($SHEMAROO)	22.4%	28.4%	27.3%	24.8%	27.1%

Top companies by CAPEX/Revenue, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Sri Adhikari Brothers Television Network ($SABTN)	119.1%	28.9%	5.1%	9.4%
Saregama India ($SAREGAMA)	4.7%	2.7%	3.4%	4.3%
Eros International Media ($EROSMEDIA)	77.5%	56.1%	0.1%	0.0%
Dq Entertainment (International) ($DQE)	78.6%	5.5%	2.0%	0.0%
Median (4 companies)	45.2%	8.1%	3.4%	2.1%
Shemaroo Entertainment ($SHEMAROO)	1.2%	2.3%	0.9%	0.7%	0.7%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Eros International Media ($EROSMEDIA)	21.0%	18.4%	15.2%	17.6%
Picturehouse Media ($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)	-10.6%	4.1%	1.7%	8.2%
Dq Entertainment (International) ($DQE)	9.1%	9.4%	9.3%	6.2%
Median (13 companies)	9.1%	2.1%	7.3%	8.2%
Shemaroo Entertainment ($SHEMAROO)	17.2%	23.5%	22.9%	21.0%	21.8%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Picturehouse Media ($PICTUREHS)	-1.1x	6.2x	3.7x	3.4x
Dq Entertainment (International) ($DQE)	1.7x	1.8x	1.9x	2.8x
Sri Adhikari Brothers Television Network ($SABTN)	112.5x	16.1x	3.5x	2.5x
Eros International Media ($EROSMEDIA)	0.3x	0.5x	0.5x	0.4x
Saregama India ($SAREGAMA)	10.1x	2.4x	3.1x	0.2x
Median (7 companies)	2.1x	2.4x	2.7x	0.4x
Shemaroo Entertainment ($SHEMAROO)	2.5x	1.7x	1.9x	2.3x	1.2x

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.