Lets assume the company has done accounting mispracticed.
Lets for a minute think rationally. This year we had Bajrangi Bhaijaan accounting for 500 CR + business. Last year we had PK.
As per capita incomes rise from $1500 to about $2500, entertainement spends do increase. Look at indonesia and phillipines. India is not unique. Indians love entertainment. We love bollywood, cricket and weddings.
2011 Disney offered $454 Million for 49.56 % stake in UTV. So value the company at about $ 900 Million.
2011 the highest grossing movie was Ra One and Don 2 about 200+ CR each.
The absolute size of the market is going to grow exponentially with higher spendings.
Eros has some sort of a business model which allows it to be market leader in distribution and co-production.
Creating a brand name in entertainment world is not easy otherwise Ambanis, Birlas and Tatas would be the market leaders.
Yes the company is not a FCF generatring. Distribution companies have to advance acquire content and keep their content library fresh everytime to attract the viewers. Sometime down the line we will see EROS FCF generating but it might take some time.
With todays closing price you are getting the market leader in india movie industry for less than $500 Million.
Be fearfull when other are greedy and be greedy when others are fearfull!!!
Disclosure – Invested
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