Looking for a growth stock? Pay attention to Shemaroo Entertainment

13-05-2015 • About Shemaroo Entertainment ($SHEMAROO) • By InTwits

Shemaroo Entertainment is an attractive 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 21.7% in FY2015. EBITDA also increased considerably: 32.6% for the same period.

In the last 3 years Shemaroo Entertainment showed fast revenue growth of 20.9% from FY2012 to FY2015 annually. EBITDA surged on 19.0% from FY2012 to FY2015 annually.

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

mln. INR	FY2011	FY2012	FY2013	FY2014	FY2015
Revenue	1,582	1,820	2,147	2,646	3,219
Revenue growth, %		15.0%	18.0%	23.2%	21.7%
SG&A, %
EBITDA	354	517	587	657	871
EBITDA growth, %		46.0%	13.7%	11.9%	32.6%
EBITDA margin, %	22.4%	28.4%	27.3%	24.8%	27.1%
Net Income	136	209	234	273	409
Net Income margin, %	8.62%	11.5%	10.9%	10.3%	12.7%

CAPEX	18	42	20	19	22
CAPEX/Revenue, %	1.15%	2.30%	0.927%	0.713%	0.688%
Debt	961	928	1,102	1,512	1,060
Cash	70	65	11	9	25
Net Debt/EBITDA	2.5x	1.7x	1.9x	2.3x	1.2x

ROIC, %	17.2%	23.5%	22.9%	21.0%	21.8%
ROE, %	16.2%	19.3%	17.1%	16.9%	16.6%

Profitability and return on investment

EBITDA growth was supported by margin expansion. The company's EBITDA margin increased on 2.30 pp from 24.8% to 27.1% in FY2015. In the longer period Shemaroo Entertainment showed small EBITDA margin decline of 1.30 pp from 28.4% in FY2012 to 27.1% in FY2015.

Shemaroo Entertainment shows attractive ROIC at 21.8% for the last 12 months which assumes stable development model. Three years ago it was a bit higher at 23.5%. It's average ROIC for the last three years was 21.9%.

Shemaroo Entertainment showed fast Net Income margin growth of 2.40 pp from 10.3% to 12.7% in FY2015. If we look for the longer period the company's Net Income margin surged on 1.20 pp from 11.5% in FY2012 to 12.7% in FY2015.

Shemaroo Entertainment operates at ROE of 16.6%. Average ROE for the last three years was 16.9%.

Capital expenditures (CAPEX)

In FY2015 Shemaroo Entertainment had CAPEX/Revenue of 0.688%. Shemaroo Entertainment showed big decline in CAPEX/Revenue of 1.61 pp from 2.30% in FY2012 to 0.688% in FY2015. Average CAPEX/Revenue for the last three years was 0.776%.

Leverage (Debt)

Shemaroo Entertainment has medium debt level at 1.2x Net Debt/EBITDA to maintain high growth. If we look for the longer period Shemaroo Entertainment showed big decline in leverage of 0.48x from 1.67x in FY2012 to 1.19x in FY2015.

Valuation vs. comparable companies

The market closed today at 8.0x EV/EBITDA for Shemaroo Entertainment which is 42.7% lower than 13.9x Movies & Entertainment peer group avearge calculated on the basis of 56 companies. At the end of trading day today Shemaroo Entertainment traded at 14.5x P/E which is 6.49% lower than 15.5x Movies & Entertainment peer group avearge calculated on the basis of 2 companies.

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.