Shemaroo Entertainment Net Income surged on 27.4% and EBITDA Margin increased on 2.3 pp from 27.1% to 29.4%

06-05-2016 • About Shemaroo Entertainment ($SHEMAROO) • By InTwits

Shemaroo Entertainment reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:

Shemaroo Entertainment is a fast growth stock: FY2016 revenue growth was 16.2%, 5 year revenue CAGR was 18.8% at FY2016 ROIC 21.3%
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 18.8%.
CAPEX is quite volatile: ₹49m in FY2016, ₹22m in FY2015, ₹19m in FY2014, ₹20m in FY2013, ₹42m in FY2012
The company has highly profitable business model: ROIC is 21.3%
It operates with medium-size leverage: Net Debt/EBITDA is 1.8x while industry average is 1.9x

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

Revenue and profitability

Shemaroo Entertainment's Revenue surged on 16.2%. During FY2012-FY2016 Revenue growth topped in FY2014 at 23.2% and was decelerating since that time. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 8.0 pp from 9.7% to 17.7% in FY2016. During FY2012-FY2016 EBITDA Margin bottomed in FY2014 at 24.8% and was growing since that time.

Net Income margin increased slightly on 1.2 pp from 12.7% to 13.9% in FY2016. During FY2012-FY2016 Net Income margin bottomed in FY2014 at 10.3% and was growing since that time.

Investments (CAPEX, working capital and M&A)

In FY2016 Shemaroo Entertainment had CAPEX/Revenue of 1.3%. CAPEX/Revenue showed almost no change from FY2013 to FY2016. It's average CAPEX/Revenue for the last three years was 0.90%. During FY2012-FY2016 CAPEX as a % of Revenue bottomed in FY2015 at 0.69%.

Return on investment

The company operates at high and attractive ROIC (21.3%) while ROE is a bit lower (15.3%). ROIC decreased slightly on 0.56 pp from 21.8% to 21.3% in FY2016. ROE decreased slightly on 1.4 pp from 16.6% to 15.3% in FY2016. ROE declined at -0.86 pp per annum in the last 5 years.

Leverage (Debt)

Company's Net Debt / EBITDA is 1.8x and Debt / EBITDA is 1.8x. Net Debt / EBITDA jumped on 0.6x from 1.2x to 1.8x in FY2016. Debt surged on 84.6% while cash dropped on 47.8%.

Shemaroo Entertainment has short term refinancing risk: cash is only 0.7% of short term debt.

Valuation and dividends

The company's trades at EV/EBITDA 9.9x and P/E 17.1x while industy averages are 17.8x and 21.9x. Shemaroo Entertainment's EV/(EBITDA-CAPEX) is 10.3x with the industry average at 22.8x.

Financial and operational results

Shemaroo Entertainment ($SHEMAROO) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	1,820	2,147	2,646	3,219	3,740	16.2%
EBITDA	517	587	657	871	1,098	26.0%
Net Income	209	234	273	409	521	27.4%
Balance Sheet
Cash	65	11	9	25	13	-47.8%
Short Term Debt	877	1,099	1,411	1,057	1,727	63.4%
Long Term Debt	51	2	101	3	229	7,026.9%
Cash flow
Capex	42	20	19	22	49	121.6%
Ratios
Revenue growth	15.0%	18.0%	23.2%	21.7%	16.2%
EBITDA growth	46.0%	13.7%	11.9%	32.6%	26.0%

EBITDA Margin	28.4%	27.3%	24.8%	27.1%	29.4%	2.3%
Net Income Margin	11.5%	10.9%	10.3%	12.7%	13.9%	1.2%
CAPEX, % of revenue	2.3%	0.9%	0.7%	0.7%	1.3%	0.6%

ROIC	23.5%	22.9%	21.0%	21.8%	21.3%	-0.6%
ROE	19.3%	17.1%	16.9%	16.6%	15.3%	-1.4%
Net Debt/EBITDA	1.7x	1.9x	2.3x	1.2x	1.8x	0.6x

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	FY2012	FY2013	FY2014	FY2015	FY2016
Prime Focus ($PFOCUS)	53.5%	-1.3%	10.8%	82.2%	-
Eros International Media ($EROSMEDIA)	33.5%	13.1%	6.2%	25.3%	-
Saregama India ($SAREGAMA)	16.9%	16.1%	-4.6%	5.1%	-
Dq Entertainment (International) ($DQE)	9.3%	1.0%	4.5%	-40.6%	-
Sri Adhikari Brothers Television Network ($SABTN)	167.5%	22.2%	11.9%	-42.6%	-
Median (6 companies)	16.9%	14.6%	7.2%	-17.8%	-
Shemaroo Entertainment ($SHEMAROO)	-	18.0%	23.2%	21.7%	16.2%

Top companies by EBITDA margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Eros International Media ($EROSMEDIA)	61.2%	65.7%	67.6%	61.2%	-
Picturehouse Media ($PICTUREHS)	-	-	-	54.1%	-
Dq Entertainment (International) ($DQE)	41.8%	48.8%	40.2%	50.5%	-
Sri Adhikari Brothers Television Network ($SABTN)	7.5%	24.7%	27.5%	43.7%	-
Mukta Arts ($MUKTAARTS)	6.4%	4.0%	1.0%	29.8%	-
Median (10 companies)	15.0%	24.8%	27.5%	24.0%	-4.3%
Shemaroo Entertainment ($SHEMAROO)	28.4%	27.3%	24.8%	27.1%	29.4%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Sri Adhikari Brothers Television Network ($SABTN)	28.9%	5.1%	9.4%	126.7%	-
Prime Focus ($PFOCUS)	24.3%	19.8%	-	20.8%	-
Saregama India ($SAREGAMA)	2.7%	3.4%	4.3%	1.8%	-
Dq Entertainment (International) ($DQE)	5.5%	2.0%	0.0%	0.6%	-
Picturehouse Media ($PICTUREHS)	-	-	-	0.5%	-
Median (6 companies)	8.1%	3.4%	2.1%	1.2%	3.2%
Shemaroo Entertainment ($SHEMAROO)	2.3%	0.9%	0.7%	0.7%	1.3%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Eros International Media ($EROSMEDIA)	18.4%	15.2%	17.6%	17.7%	-
Picturehouse Media ($PICTUREHS)	15.6%	17.3%	16.9%	12.0%	-
Sri Adhikari Brothers Television Network ($SABTN)	-4.4%	7.1%	10.6%	4.8%	-
Saregama India ($SAREGAMA)	4.1%	1.7%	8.2%	3.4%	-
Dq Entertainment (International) ($DQE)	9.4%	9.3%	6.2%	3.4%	-
Median (13 companies)	2.1%	7.3%	8.2%	4.1%	-24.0%
Shemaroo Entertainment ($SHEMAROO)	23.5%	22.9%	21.0%	21.8%	21.3%

Top companies by Net Debt / EBITDA


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Picturehouse Media ($PICTUREHS)	6.2x	3.7x	3.4x	7.0x	-
Dq Entertainment (International) ($DQE)	1.8x	1.9x	2.8x	5.0x	-
Prime Focus ($PFOCUS)	1.9x	3.5x	-	3.6x	-
Sri Adhikari Brothers Television Network ($SABTN)	16.1x	3.5x	2.5x	3.0x	-
Eros International Media ($EROSMEDIA)	0.5x	0.5x	0.4x	0.4x	-
Median (9 companies)	2.4x	2.7x	0.4x	0.4x	-
Shemaroo Entertainment ($SHEMAROO)	1.7x	1.9x	2.3x	1.2x	1.8x

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.