India (Entertainment)|Institutional Research

DOLAT CAPITAL

Shemaroo Entertainment
` 328
` 475/45%
27,818
8,611

` 272mn/` 10/` 9bn

USD 134mn
52 week High/Low
` 375/222
Avg. Volume (no)
17,186
NSE Symbol
SHEMAROO
Bloomberg Code
SHEM IN
Shareholding Pattern Sep16(%)
Promoters
65.8
MF/Banks/FIs
2.0
FIIs
13.5
Public / Others
18.7
SHEM Relative to Sensex
140

135
130
125

120
115

110
105
100

95
90

Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16

Result Update

CMP
Target / Upside
BSE Sensex
NSE Nifty
Scrip Details
Equity / FV
Market Cap

Shemaroo

BSE Sensex

Sr. Analyst: Karan Taurani

Tel: +91 22 40969754
E-mail: karant@dolatcapital.com
Associate: Vinesh Vala
Tel: +91 22 40969736
E-mail: vineshv@dolatcapital.com

Buy

New media reports yet another strong performance

SHEM reported a healthy Q2FY17 with revenue growth of 21.4%YoY
(DCMe: 18.3%). EBITDA margin improved 280bps YoY to 28% largely led
by better gross margins. Traditional media segment reported healthy
growth of 15%YoY helped by Miniplex and tie up with various DTH
providers. New media segment grew 52%YoY helped by increased
consumption of content on digital platforms; We believe this segment
will continue to grow at a robust CAGR of 43% (FY16-19E) and help drive
profitability. We maintain our BUY reco. and roll-over to Sep17 target
price of ` 475 (` 460 earlier) based on 14x one yr. fwd. PER.
Better than expected revenue growth; positive surprise on margin
SHEM reported revenue growth of 21.4%YoY to `1,136mn (DCMe:
`1,107mn) above our estimate helped by healthy growth in the traditional
media and new media segment. EBITDA margin improved 280bps YoY at
28% (DCMe: 25.4%) on back of better gross margins. PAT grew 35.8%YoY
to `152mn (DCMe: `138mn) led by strong revenue growth and better gross
margin. EPS was at ` 5.59.
New media segment reports yet another strong performance
Revenue from new media segment surged 52%YoY to ` 240mn and it now
contributes 21% of revenue as on Q2FY17. YouTube views for SHEM grew
73%YoY to 142mn views per month in Sep16 driven by increased
consumption of content on digital platforms.
Traditional segment continues to report double digit growth
Revenue from traditional segment grew 15%YoY in Q2FY17 to ` 893mn led
by a seasonally strong quarter. Working capital requirement increased by
Rs 393mnYoY to Rs 3.6bn for H1FY17 on the back of debtor days which
increased from 129 days to 163 days YoY as indicated by management; we
expect debtor days to stabilize at 140 days in the near term.
View
Traditional media will continue to report more positive surprises in the
near term helped by traction in Miniplex. New media segment will continue
to grow at a healthy CAGR of 43% (FY16-19E) which will drive earnings
growth of 28% (FY16-19E). We largely maintain our estimates and roll over
to a Sep17 target price of `475 (` 460 earlier) based on 14x one yr.fwd.
PER.
FINANCIALS (` Mn)
Particulars
Net Sales
Growth (%)
EBITDA
EBITDA Margin (%)
PAT
Growth (%)
EPS (`)
Growth (%)
PER(x)
ROANW (%)
ROACE (%)

FY15
3,235
22.2
869
26.9
409
50.3
15.1
50.3
21.8
16.6
32.1

FY16
3,749
15.9
1,098
29.3
521
27.5
22.1
46.8
14.9
15.3
29.5

FY17E
4,386
17.0
1,321
30.1
680
30.4
25.1
13.4
13.1
17.1
29.4

FY18E
5,179
18.1
1,594
30.8
860
26.6
31.7
26.6
10.3
18.2
29.4

FY19E
6,136
18.5
1,931
31.5
1,062
23.4
39.2
23.4
8.4
18.7
29.5

October 26, 2016

DOLAT CAPITAL
Q2FY17 Performance
(` mn)
Q2FY17
Revenue
1,136
EBIT
307
EBITDA
318
Pre Tax Profit
237
Net Profit
152
Margins (%)
EBIT Margin
27.1
EBITDA Margin
28.0
Net Margin
13.4
Segment revenue
Traditional
893
New Media
240

DCMe
1,107
272
281
212
138

Diff (%)
2.6
12.9
13.1
11.7
10.3

Q1FY17
959
287
298
223
140

24.6
25.4
12.5

QoQ(%)
18.4
6.9
6.7
6.3
8.3

30.0
31.1
14.6

870
237

2.6
1.1

Q2FY16
935
227
236
187
112

YoY(%)
21.4
35.6
34.9
27.0
35.8

24.2
25.2
12.0

750
201

19.1
18.9

777
158

15.0
51.6

Source: Dolat Research

New media segment- revenue and YoY growth

(Rs mn)

Revenue (Rs mn)

300

(%)

YoY growth

90

82

80
250

68

70
54

200

50

52

60
50

150
40
100

30
20

50
10
0

0
Q2FY16

Q3FY16

Q4FY16

Q1FY17

Q2FY17

Source: Dolat Research, Company

October 26, 2016

Shemaroo Entertainment

DOLAT CAPITAL
Income Statement
Particulars
Net Sales
Total Expenditure
Raw Material
Employee Expenses
Other Expenses
EBIDTA
Net Interest Expense
Gross Profit
Depreciation
PBT & EO Items
Profit Before Tax
Tax
Net Profit
Minority Interest
Net Profit

Mar16 Mar17E Mar18E Mar19E

3,749
4,386
5,179
6,136
2,651
3,065
3,585
4,205
2,234
2,585
3,030
3,557
233
268
310
361
184
212
246
287
1,098
1,321
1,594
1,931
211
240
232
257
1,515
1,801
2,150
2,579
37
36
38
41
850
1,046
1,323
1,633
850
1,046
1,323
1,633
307
366
463
572
543
680
860
1,062
22
0
0
0
521
680
860
1,062

Balance Sheet
Particulars
Sources of Funds
Equity Capital
Other Reserves
Net Worth
Loan Funds
Total Capital Employed

Mar16 Mar17E Mar18E Mar19E

272
3,376
3,648
303
3,951

Applications of Funds
Net Block
307
Other LT Assets (+)
66
Investments
66
Current Assets, Loans & Advances
Inventories
3,846
Sundry Debtors
1,066
Cash and Bank Balance
13
Loans and Advances
768
sub total
5,692
Less: Current Liabilities & Provisions
Current Liabilities
2,179
sub total
2,179
Net Current Assets
3,514
Total Assets
3,951
E Estimates

272
4,041
4,313
473
4,786

272
4,884
5,156
642
5,798

272
5,928
6,200
818
7,018

326
66
66

349
66
66

377
66
66

4,746
1,682
24
240
6,693

5,676
1,987
65
284
8,011

6,758
2,354
86
336
9,534

2,365
2,365
4,327
4,786

2,694
2,694
5,318
5,798

3,023
3,023
6,510
7,018

Cash Flow
Particulars
Profit before tax
Depreciation & w.o.
Other Non-Cash Adj.
Direct taxes paid
Change in Working Capital
(A) CF from Opt. Activities
Capex
Inc./ (Dec.) in Investments
Other
(B) CF from Invt. Activities
Issue of Equity/ Preference
Chg. in Short-Term Borrow
Chg. in Long-Term Borrow
Dividend Paid (Incl. Tax)
Finance expense
(C) CF from Financing
Net Change in Cash
Opening Cash balances
Closing Cash balances

Mar16 Mar17E Mar18E Mar19E

850
1,046
1,323
1,633
37
36
38
41
(18)
(12)
(13)
(24)
(1,066)
(366)
(463)
(572)
(232)
(803)
(949) (1,172)
(428)
(99)
(64)
(93)
(49)
(22)
(26)
(31)
81
0
0
0
(72)
0
0
0
(40)
(22)
(26)
(31)
0
0
0
0
501
0
0
0
226
170
172
177
(32)
(38)
(38)
(38)
(232)
0
0
0
457
132
131
144
(12)
11
41
21
24
13
24
65
13
24
65
86

Important Ratios
Particulars
Mar16 Mar17E Mar18E Mar19E
(A) Measures of Performance (%)
EBIDTA Margin
29.3
30.1
30.8
31.5
Interest / Sales
5.6
5.5
4.5
4.2
Gross Profit Margin
40.4
41.1
41.5
42.0
Tax/PBT
36.1
35.0
35.0
35.0
Net Profit Margin
13.9
15.5
16.6
17.3
(B) As Percentage of Net Sales
Cost of Goods
59.6
58.9
58.5
58.0
Employee Expenses
6.2
6.1
6.0
5.9
Other Expenses
4.9
4.8
4.7
4.7
(C) Measures of Financial Status
Debtors Period (days)
104
140
140
140
Closing stock (days)
374
395
400
402
Inventory Turn Ratio (x)
1.0
0.9
0.9
0.9
Fixed Assets Turnover (x)
12.2
13.4
14.8
16.3
WC Turnover (x)
1.1
1.0
1.0
0.9
Non Cash WV (` Mn)
3,501
4,304
5,252
6,425
(D) Measures of Investment
EPS (`) (excl EO)
22.1
25.1
31.7
39.2
EPS (`)
22.1
25.1
31.7
39.2
CEPS (`)
20.6
26.4
33.2
40.7
DPS (`)
1.4
1.4
1.4
1.4
Dividend Payout (%)
6.3
5.6
4.4
3.6
Profit Ploughback (%)
93.7
94.4
95.6
96.4
Book Value (`)
134.6
159.1
190.3
228.8
RoANW (%)
15.3
17.1
18.2
18.7
RoACE (%)
29.5
29.4
29.4
29.5
RoAIC (%)
29.6
29.5
29.7
29.8
(E) Valuation Ratios
CMP (`)
328
328
328
328
P/E (x)
14.9
13.1
10.3
8.4
Market Cap. (` Mn)
8,927
8,927
8,927
8,927
MCap/ Sales (x)
2.4
2.0
1.7
1.5
EV (` Mn)
9,217
9,376
9,504
9,659
EV/Sales (x)
2.5
2.1
1.8
1.6
EV/EBDITA (x)
8.4
7.1
6.0
5.0
P/BV (x)
2.4
2.1
1.7
1.4
Dividend Yield (%)
0.4
0.4
0.4
0.4
E Estimates

October 26, 2016

Shemaroo Entertainment

DOLAT CAPITAL

Stock price return objective (12 Months)

Buy

> 15%

Accumulate

5 to 15%

Reduce

(-5) to 5%

Sell

< -5%

Dolat Team
Purvag Shah

Principal

purvag@dolatcapital.com

+91-22-40969747

Amit Khurana, CFA

Head of Equities and Head of Research

amit@dolatcapital.com

+91-22-40969745

CONTACT DETAILS
Equity Trading

Designation

E-mail

Direct Lines

Kishor Bagri
Akshata Deshmukh
Kapil Yadav

VP- Equity Sales

VP- Equity Sales & Derivatives Strategist
AVP - Institutional Sales

kishorb@dolatcapital.com
akshatad@dolatcapital.com
kapil@dolatcapital.com

+91-22-40969746
+91-22-40969705
+91-22-40969735

Equity Trading

Designation

E-mail

P. Sridhar
Chandrakant Ware

Head - Sales Trading (Equities)

AVP - Equity Sales Trading

sridhar@dolatcapital.com
+91-22-40969728
chandrakant@dolatcapital.com +91-22-40969707

Derivatives Trading

Designation

E-mail

Jatin Padharia
Shirish Thakkar

Head - Sales Trading (Derivatives)

Sales Trader - Derivatives

jatin@dolatcapital.com
shirisht@dolatcapital.com

+91-22-40969703
+91-22-40969702

Dolat Capital Market Pvt. Ltd.

20, Rajabahadur Mansion, 1st Floor, Ambalal Doshi Marg, Fort, Mumbai - 400 001

DOLAT CAPITAL

Dolat Capital Market Pvt. Ltd.

Corporate Identity Number: U65990MH1993PTC075189
Member: BSE Limited and National Stock Exchange of India Limited.
SEBI Registration No: BSE - INB010710052 & INF010710052, NSE - INB230710031& INF230710031, Research: INH000000685
Registered office: DOLAT Plot 60B, East West Road No. 2, JVPD Scheme, Vile Parle (West), Mumbai-400 049.
Board: +9122 40969700 | Fax: +9122 22651278 | Email: research@dolatcapital.com | www.dolatcapital.com
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