Result Update November 20, 2015

Rating matrix Rating : Buy Eros International (EROINT) | 235 Target : | 311 Target Period : 12 mont hs Effort needed to resurrect investor confidence Potential Upside : 32%

• The topline came in at | 504.9 crore against our estimate of | 495.4 What’s changed? crore driven by movies like Bajrangi Bhaijaan (net domestic box Target Changed from UR to | 311 office collection of over | 300 crore), Welcome Back (gross collection EPS FY16E Changed from | 32.4 to | 31.3 of over | 100 crore) and (regional movie, which went EPS FY17E Changed from | 38.2 to | 31.1 on to become all-time second highest Telugu grosser) Rating From Under Review to Buy • The EBITDA margin at 26.9% was lower than our estimate of 31.7% Quarterly performance mainly due to higher operating expenses, which can largely be Q2FY16 Q2FY15 YoY (%) Q1FY16 QoQ (%) attributed to higher marketing costs due to a mix of films comprising Revenue 504.9 239.9 110.5 472.5 6.9 more of high and medium budget movies EBITDA 135.8 73.4 85.0 89.5 51.8 • PAT came in at | 90.4 crore against our estimate of | 112 crore EBITDA (%) 26.9 30.6 -371 bps 18.9 795 bps mainly due to lower operating margins, which led to a PAT miss PAT 90.4 50.1 80.3 53.4 69.4 Leading producer/distributor with one of the largest film libraries

Eros, producer/distributor with a large film library of over 2000 films, has Key financials entered into partnerships with three Chinese film companies to explore | Crore FY14 FY15 FY16E FY17E joint opportunities. Also, it has launched Trinity Pictures to focus on Net Sales 1,135 1,421 1,770 1,952 franchise films. The company released 64 movies in FY15 across , EBITDA 300 349 444 494 Tamil/Telugu & other languages, of which seven were high budget Net Profit 200 247 290 287 movies. Though the whole of FY15 was relatively weaker for the movie EPS (|) 21.7 26.7 31.3 31.1 industry, Eros managed to grow box office collections (domestic &

overseas) by ~27%. It continues to get its movie selection right, evident Valuation summary from its presence in three out of top four box office releases in H1FY16. FY14 FY15 FY16E FY17E Q2 was marked by several superhits like Bajrangi Bhaijaan, Welcome Back P/E 10.8 8.8 7.5 7.6 and Srimanthudu. The regional foray is not only helping Eros expand its Target P/E 14.3 11.6 9.9 10.0 footprint in Indian cinema but is also accretive to its financials. EV / EBITDA 8.0 7.0 6.2 6.0 P/BV 1.8 1.5 1.2 1.1 Q2 - Strongest ever quarter led by super hits… RoNW 16.5 16.7 16.6 14.1 Q2FY16 was one of the best with releases like Bajrangi Bhaijaan (net RoCE 16.6 16.7 17.7 16.2 domestic box office collection of over | 300 crore), Welcome Back (gross

collection of over | 100 crore) and Srimanthudu (regional movie, which Stock data went on become all-time second highest Telugu grosser). While for Particular Amount H2FY16, it has one big release, Bajirao Mastanii, lined up, the content Market Capitalization (| Crore) 2,177.2 pipeline for FY17 is robust. We expect theatrical revenues (inclusive of Total Debt (FY15) (| Crore) 425.0 overseas) to grow at 13.8% CAGR in FY15-17E to | 1265.1 crore in FY17E. Cash (FY15) (| Crore) 169.7 Weathering tough times on accounting allegations… EV 2,432.6 52 week H/L 634 / 204 The company saw a sharp correction in its stock led by rising concerns Equity capital 92.5 over accounting practices followed by the parent company, the stark Face value 10.0 increase in receivables owing to increased business exposure to UAE, validation of the Eros Now user base and future cash flow viability. While

the company provided a point to point rebuttal (see Page 4), the damage

was already done. We believe the improvement in receivables, a clear

transfer pricing deal with the parent coupled with other steps such as announcing dividend payment and a possible share buyback would

remain key to revive confidence levels.

Lot required to restore investor confidence; maintain BUY

We highlight that recent allegations have been a big dent to investors’ confidence despite the company’s point to point rebuttal. While we Research Analyst continue to have faith in the company’s business model, we believe a lot Bhupendra Tiwary needs to be done by Eros to restore the investors’ confidence. Possible [email protected] decisions such as announcing dividend payment, a possible share Sneha Agarwal buyback, or improvement in receivables would remain few key [email protected] monitorables for confidence building. We continue to maintain BUY rating

valuing Eros at 10x FY17E EPS to arrive at a target price of | 311. We

believe that a strong financial performance coupled with improvement in receivables would be the driver for stock price performance.

ICICI Securities Ltd | Retail Equity Research

Variance analysis • Q2FY16 Q1FY16E Q2FY15 Q1FY16 YoY (%) QoQ (%) Comments Revenue 504.9 495.4 239.9 472.5 110.5 6.9 The topline was higher driven by movies like Bajrangi Bhaijaan, Welcome Back and Srimanthudu Other Income 5.1 4.0 0.4 8.1 1,167.5 -37.5

Raw Material Expenses 0.0 0.0 0.0 0.0 NA NA Employee Expenses 14.2 13.9 6.7 10.9 111.3 30.9 Administrative Expenses 13.8 17.3 15.0 10.1 -8.2 37.3 Operating Expenses 340.7 307.0 146.0 230.2 133.3 48.0 Changes in inventories of finished goo 0.4 0.0 -1.3 131.9 -134.6 -99.7

EBITDA 135.8 157.2 73.4 89.5 85.0 51.8 EBITDA Margin (%) 26.9 31.7 30.6 18.9 -371 bps 795 bps Margins lower than our estimate mainly due to higher operating expenses, which can largely be attributed to higher marketing costs due to a mix of films comprising more high seven medium budget movies Depreciation 1.7 1.9 1.7 1.3 2.4 33.3 Interest 10.5 8.8 10.9 8.5 -4.1 23.8

Total Tax 37.5 37.6 11.1 24.5 238.8 53.1 PAT 90.4 112.0 50.1 53.4 80.3 69.4 PAT was lower mainly due to lower operating margins, which led the PAT miss

Source: Company, ICICIdirect.com Research

Change in estimates FY16E FY17E (| Cr or e) Old New % Change Old New % Change Comments Revenue 1,760.1 1,769.6 0.5 1,951.5 1,951.5 0.0 The topline estimates have been largely unchanged EBITDA 442.5 443.7 0.3 532.0 494.5 -7.1 EBITDA Margin (%) 25.1 25.1 -7 bps 27.3 25.3 -193 bps We build in lower margins as we incorporate H1FY16 performance PAT 299.8 289.8 -3.3 353.8 287.3 -18.8 We build in full tax rate from FY17E onwards EPS (|) 32.4 31.3 -3.3 38.2 31.1 -18.8

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research Page 2

Company Analysis Strong content pipeline The company released 64 movies in FY15 across Hindi, Tamil/Telugu and other languages, of which seven were high budget movies. Though the whole of FY15 was relatively weaker for the movie industry, Eros managed to grow box office collections (domestic and overseas) by ~27%. The company continues to get its movie selection right, evident from its presence in three out of top four box office releases in H1FY16. Last year, movies such as Kochadaiiyaan, Main Tera Hero (overseas), Ek Villain (overseas), Mary Kom (overseas) and Badlapur turned out to be good bets. In the ongoing fiscal, Bajrangi Bhaijaan, Tanu Weds Manu Returns and Welcome Back were superhits. In addition, Eros is rapidly increasing its footprint in the regional domain with movies that have fared quite well such as Srimanthudu (Telugu), Lingaa (multi-lingual), (Telugu), Kaththi (Tamil), etc.

Going ahead, with the robust content pipeline as shown below, we expect theatrical revenues (inclusive of overseas) to grow at 13.8% CAGR in FY15-17E to | 1265.1 crore in FY17E.

Exhibit 1: Content pipeline over H2FY16 and FY17E Movie name Starcast / (Director) Expected Bajirao Mastani Ranveer Singh, Deepika Padukone, Priyanka Chopra (Sanjay Leela Bhansali) H2FY16 Mumbai2 (Marathi) Swapnil Joshi, Mukta Barve (Satish Rajwade) H2FY16 Do Lafzon KI Kahani Randeep Hooda, Kajal Aggarwal (Deepak Tijori) H2FY16 Mukhtiar Chadha (Punjabi) Diljit Dosanjh, Oshin Sai (Chetan Parwana) H2FY16 24 (Tamil) Suriya Sivakumar & Others (Vikram Kumar) H2FY16 Sanam Teri Kasam Harshvardhan Rane, Mawra Hocane (Radhika Rao, Vinay Sapru) H2FY16 Kai Neelam( Tamil) Vijay Sethupathy, Samuthrakani & Others (Nalan Kumaraswamy) H2FY16 Sardar Gabbar Singh (Telugu) (K. S. Ravindra) H2FY16 Aligarh Rajkumar Rao, Manoj Bajpai (Hansal Mehta) H2FY16 Dictator (Telugu) Balakrishna (Srivaas) H2FY16 Naale () Fahad Fazil, Malavika S Mohan, Isha Talwar, Mukesh (Shiju S Bawa) H2FY16 Phuntroo ( Marathi ) Madan Deodhar, Ketaki Mategaonkar, (Sujay S Dahake) H2FY16 Enkitta Mothathe (Tamil) Natarajan SubramaniyamRajaji and Vijay Murugan (Ramu Chellappa) H2FY16 Phobia Radhika Apte (Pawan Kriplani) H2FY16 Guru (Marathi) Ankush Chaudhary, Urmila Kannetkar (Sanjay Jadhav) H2FY16 Housefull 3 Akshay Kumar, Abhishekh Bachchan, Rietesh Deshmukh (Sajid-Farhad) FY17 Dishoom Varun Dhawan, John Abraham, Jacqueline Fernandez (Rohit Dhawan) FY17 Shivay Devgn (Ajay Devgn Productions) FY17 Singham - 3 (Tamil) Suriya, Anushka Shetty, (Hari) FY17 Banjo Riteish Deshmukh, Nargis Fakhri (Ravi Jadhav) FY17 Raabta Sushant Singh Rajput (Dinesh Vijayan and Homi Adajania) FY17 Chaar Sahibzaade 2 (Punjabi) Sequel to the Chaar Sahibzade, 3D animation (Harry Baweja) FY17 Guru Tegh Bhadur (Punjabi) 3D Animation (Harry Baweja) FY17 Baar Baar Dekho Siddharth Malhotra, Katrina Kaif (Nitya Mehra) FY17 Rock on 2 Farhan Akhtar, Arjun Rampal, Shraddha Kapoor (Farhan Akhtar) FY17 Reunion Various artistes (Sujoy Gosh) FY17 Farzi Shahid Kapoor, Kriti Sanon (Raj Nidimoru and D.K.) FY17 Bhavesh Joshi Harshvardhan Kapoor (Vikramaditya Motwane/Phantom Films) FY17 Happy Bhaag Jayegi Abhay Deol, Diana Penty, Fazal (Mudassar Aziz) FY17 Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research Page 3

Foraying into Chinese market Eros has entered into partnerships with three Chinese film companies to explore joint opportunities such as promote, co-produce, distribute and unlock value in respective intellectual properties for Sino-Indian films across all platforms in both countries.

Foreign films, mainly from Hollywood, accounted for about 45% of total Chinese box office on a strict quota of 34 movies, with the rest coming from over 600 local Chinese films and displayed in China, which has about 23600 screens. The company recently announced its first ever Sino-Indian film project, Da Tang Xuan Zang (Monk Xuan Zang) in collaboration with Chinese state owned production company, Chinese Film Corporation. Though the region provides ample growth prospects, it is difficult to quantify the opportunity arising from Sino-Indian projects. Hence, we have not factored it in our estimates.

De-risked business - Changing mix towards catalogue, satellite & ancillary Eros generally recovers its whole production cost even before theatrical release in the form of sale of music rights, satellite rights and 39% guaranteed cost recovery from its parent for international distribution. In addition, monetisation of its huge movie library over pay TV and innovative box office performance linked satellite rights will further reduce its dependence on theatrical revenue. We expect collective revenues from other segments to grow at 24.2% CAGR in FY15-17 to | 686.4 crore in FY17E, forming 35.2% of overall revenue. However, we have not included revenue from HBO channels in our estimates.

Weathering tough times on accounting allegations… The company saw a sharp correction in its stock led by rising concerns over accounting practices followed by the parent company, the stark increase in receivables owing to increased business exposure to UAE, validation of the Eros Now user base and the future cash flow viability. The parent has provided a point-to-point rebuttal to the concerns:

• Increase in receivables at parent Level – The increase of US$98 million receivables can be partly attributed to an increase in revenues and partly to extended terms to customers. Its receivables level is in line with global content companies where it is expected at 50-55% of revenues. The Indian subsidiary aims to bring overall receivables down to | 525 crore by the end of FY16. • Increase in revenues from UAE – Eros PLC has 45.2% of revenues from the rest of the world (including UAE). Since the UAE subsidiary owns international rights to its library, it appears as revenue from that region. The company’s market includes Japan, Taiwan, South Korea, Russia, Africa, Poland and Indonesia. Once a partner has demonstrated consistent, profitable results in a market, the company expects to extend preferred payment terms as an incentive and retention plan. Furthermore, while the reported geographical segment revenue shows that India contributes just under 40% of total revenues in FY15, attributing a percentage of the reported revenues for the rest of the world to India as is the case, contribution from India translates to ~50-55% of Eros International’s total revenues • Content amortisation – The parent’s amortisation policy, of amortising 40% in the first year and balance over nine years or life of assets, is as conservative as its US peers, despite the fact that the Indian film entertainment has a much longer “tail” of revenues. Library revenues generally account for at least 20-25% of revenues

ICICI Securities Ltd | Retail Equity Research Page 4

each year while television and other rights licensing contribute to this significantly. Accordingly, to consider these rights worthless, after just a year of release, reflects ignorance and gross misunderstanding about the industry as a whole • Eros Now user base - The 30 million registered users reported by ErosNow as of September 30, 2015 are a combination of web, WAP and app users. Due to the leverage it got from its acquisition of Techzone, a mobile value-added services provider in India, a large part of ErosNow users are currently mobile users • Capex increase, free cash flow and increasing debt - The amount the company spends each year on content capex or investment in content is used to complete and release that current year’s film slate as well as to partially fund the release slate for the following two years, given Eros likes to maintain a two year visibility of its slate. Over the last three fiscal years, the company has generated over $388 million in net cash from operating activities. The outlook for spend this year is $225 million and Eros believes it is on track to generate free cash flow by the end of FY16. The total net debt to adjusted EBITDA ratio of the company was 1.59x as of FY15. Hence, Eros is under-levered compared to many of its US peers and has no significant debt repayable in the next 12 months

Furthermore, the company has appointed one of the Big four auditors to carve out transfer pricing terms for transactions. It expects the same to be finalised by FY16 end. We believe the improvement in receivables, a clear transfer pricing deal with parent coupled with other steps such as announcing dividend payment and a possible share buyback would remain key to revive confidence levels.

ICICI Securities Ltd | Retail Equity Research Page 5

Valuation We highlight that recent questions that have cropped up have been a big dent to investors’ confidence despite the company’s point by point rebuttal. While we continue to have faith in Eros’ business model, we believe a lot needs to be done by the company to restore investors’ confidence. Possible decisions such as announcing dividend payment, a possible share buyback (at parent level) or improvement in receivables would remain few key monitorables for confidence building. We continue to maintain BUY rating valuing it at 10x FY17E EPS to arrive at a target price of | 311. We believe a strong financial performance coupled with improved debtors would be the driver for the stock price performance.

Exhibit 2: Valuations Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE (| cr) (% ) (|) (%) (x) (x) (%) (%) FY14 1134.7 6.2 21.7 29.2 10.8 8.0 16.5 16.6 FY15 1421.2 25.2 26.7 23.0 8.8 7.0 16.7 16.7 FY16E 1769.6 24.5 31.3 17.3 7.5 6.2 16.6 17.7 FY17E 1951.5 10.3 31.1 -0.8 7.6 6.0 14.1 16.2

Source: Company, ICICIdirect.com Research

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Company snapshot

700

600

500 Target Price | 311

400

300

200

100

0 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Oct-10 Oct-11 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16

Source: Bloomberg, Company, ICICIdirect.com Research

Key events Date Event Oct-10 Company converted into public limited company. Name changed to Eros International Media Ltd Nov-11 Eros International's Rockstar records hugely successful opening weekend collection of | 64 crore gross worldwide May-12 Launches online entertainment service, ‘Eros Now’ to offer digitised Bollywood film content Sep-13 Eros gains as parent Eros International PLc files update for IPO listing with the SEC Nov-13 Temasek's Fullerton buys stake in Indian film distributor through Eros International Plc ganing a foothold in the local movie industry, Bollywood Dec-13 Movies like Yeh Jawani Hai Deewani , Ram Leela and R Rajkumar fare exceedingly well at the box office Dec-13 Eros International Media (Eros International) forays into the Telugu market by co-producing 's '1 ' Nenokkadine . Produced by 14 Reels Entertainment and Eros, the upcoming action thriller releases on January 10, 2014 Aug-14 Acquires mobile VAS player Techzone to manage billing and marketing of its digital offerings through Eros Now across mobile platforms May-15 Signs deals with three major Chinese state owned film and entertainment companies to promote, co-produce, distribute and unlock value in respective intellectual properties for Sino-Indian films across all platforms in both the countries through co-productions, dubbed releases and remakes Oct-15 The stock of the parent company faces several downgrades by some renowned investment banks on concerns relating to the increase in recievables, cash flows and increasing exposure to the UAE. In addition, some of the investment blogs highlight several accounting related inconsistencies in the financials of the company leading to such a massive slump in the stock price

Source: Company, ICICIdirect.com Research

Top 10 Shareholders Shareholding Pattern Rank Name Latest Filing Date % O/S Position (m) Change (m) (in %) Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 1 Eros Worldwide FZ, L.L.C. 31-Mar-15 50.4 47.1 0.0 Promoter 74.52 74.41 74.41 74.37 73.66 2 Eros Digital Pvt. Ltd. 31-Mar-15 23.2 21.7 0.0 FII 17.78 18.15 19.48 18.26 20.48 3Skagen AS 30-Sep-152.80 2.61.3DII 1.241.160.992.390.08 4 Norges Bank Investment Management (NBIM) 31-Mar-15 2.25 2.1 -0.2 Others 6.46 6.28 5.12 4.98 5.78 5 Handelsbanken Asset Management 31-Mar-15 1.46 1.4 -1.1 6 Indus Capital Partners, LLC 31-Mar-15 1.37 1.3 -0.1 7 Dimensional Fund Advisors, L.P. 31-Aug-15 1.25 1.2 0.0 8 Danske Capital 31-Mar-15 1.22 1.1 -0.3 9 Jupiter Asset Management Ltd. 31-Mar-15 1.17 1.1 -0.6 10 Manulife Asset Management (Asia) 31-Mar-15 1.10 1.0 0.4

Source: Reuters, ICICIdirect.com Research

Recent Activity Buys Sells Investor name Value Shares Investor name Value Shares Skagen AS 10.15m 1.27m Handelsbanken Asset Management -7.32m -1.14m Manulife Asset Management (Asia) 2.72m 0.42m Jupiter Asset Management Ltd. -3.74m -0.55m Russell Investments Limited 1.98m 0.25m Thomas White International, Ltd. -3.52m -0.47m Octopus Investments Limited 1.54m 0.24m Danske Capital -1.60m -0.25m Putnam Investment Management, L.L.C. 1.13m 0.14m OppenheimerFunds, Inc. -1.59m -0.20m tekle Source: Reuters, ICICIdirect.com Research

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Financial summary

Profit and loss statement | Crore Cash flow statement | Crore (Year- end March) FY14 FY15 FY16E FY17E (Year- end March) FY14 FY15 FY16E FY17E Total operating Income 1,134.7 1,421.2 1,769.6 1,951.5 Profit after Tax 199.7 247.1 289.8 287.3 Growth (%) 6.2 25.2 24.5 10.3 Add: Depreciation & Amortization 5.0 6.9 6.6 6.6 Operating Expenses 767.4 1,072.9 1,090.8 1,320.4 Add: Interest Paid 32.7 38.4 36.9 63.0 Employee Expenses 28.2 35.9 47.2 58.5 (Inc)/dec in Current Assets -30.0 -502.3 -73.4 -76.6 Administrative Expenses 33.5 96.7 55.5 78.1 Inc/(dec) in CL and Provisions 128.4 709.2 284.4 253.8 Change in inventory& Other exp. 5.8 (132.9) 132.4 - CF from operating activities 335.9 499.3 544.3 534.1 Total Operating Expenditure 834.9 1,072.6 1,325.9 1,457.1 (Inc)/dec in Fixed Asset -393.8 -619.4 -800.0 -700.0 EBITDA 299.8 348.6 443.7 494.5 Others 51.0 105.5 12.2 5.9 Growth (%) 32.5 16.3 27.3 11.4 CF from investing activities -342.8 -513.9 -787.8 -694.1 Depreciation 5.0 6.9 6.6 6.6 Issue/(Buy back) of Equity 0.0 0.5 1.0 0.0 Interest 32.7 38.4 36.9 63.0 Inc/(dec) in loan funds -0.9 41.8 150.0 225.0 Other Income 5.0 19.9 21.2 16.0 Dividend & dividend tax - - - - PBT 267.0 323.2 421.3 440.9 Interest Paid 32.7 38.4 36.9 63.0

Total Tax 73.7 76.2 119.3 147.7 Others -10.4 -12.4 -62.9 -63.0 Minority Interest (6.4) (0.1) 12.2 5.9 CF from financing activities -11.2 29.9 88.0 162.0 PAT 199.7 247.1 289.8 287.3 Net Cash flow -18.1 15.3 -155.4 1.9 Growth (%) 29.3 23.7 17.3 -0.8 Opening Cash 172.5 154.4 169.7 14.3 EPS (|) 21.7 26.7 31.3 31.1 Closing Cash 154.4 169.7 14.3 16.2

Source: Company, ICICIdirect.com Research Source: Company, ICICIdirect.com Research

Balance sheet | Crore Key ratios (Year- end March) FY14 FY15 FY16E FY17E (Year- end March) FY14 FY15 FY16E FY17E Liabilities Per share data (|) Equity Capital 92.0 92.5 93.5 93.5 EPS 21.7 26.7 31.3 31.1 ESOP's - - - - Cash EPS 22.3 27.5 32.0 31.8 Reserve and Surplus 1,116.7 1,389.7 1,653.5 1,940.8 BV 131.4 160.2 188.8 219.9 Total Shareholders funds 1,208.6 1,482.2 1,746.9 2,034.2 DP S 0.0 0.0 0.0 0.0

Total Debt 383.2 425.0 575.0 800.0 Cash Per Share 16.8 18.3 1.5 1.7

Other Non Current Liabilities 208.6 259.2 271.4 277.3 Operating Ratios (%) Total Liabilities 1,800.4 2,166.4 2,593.4 3,111.5 EBITDA Margin 26.4 24.5 25.1 25.3 EBIT / Total Operating income 26.0 24.0 24.7 25.0 Assets PAT Margin 17.6 17.4 16.4 14.7 Gross Block 3,438.5 4,116.4 5,139.3 5,998.3 Inventory days 1.3 35.2 31.6 27.7 Less: Acc Depreciation 2,397.7 2,902.3 2,908.9 2,915.5 Debtor days 66.0 135.0 110.0 115.0 Net Block 1,040.8 1,214.1 2,230.3 3,082.8 Creditor days 117.6 277.7 275.0 295.0 Capital WIP 578.9 1,018.1 795.2 636.2 Return Ratios (%) Total Fixed Assets 1,619.7 2,232.2 3,025.6 3,719.0 RoE 16.5 16.7 16.6 14.1 Investments 8.0 0.0 0.0 0.0 RoCE 16.6 16.7 17.7 16.2 Inventory 4.0 136.9 153.4 148.1 RoIC 29.0 35.1 24.6 19.9 Debtors 205.3 525.7 533.3 614.9 Valuation Ratios (x) Loans and Advances 146.1 184.0 229.0 227.3 P/E 10.8 8.8 7.5 7.6 Other Current Assets 5.3 16.3 20.5 22.6 EV / EBITDA 8.0 7.0 6.2 6.0 Cash 154.4 169.7 14.3 16.2 EV / Net Sales 2.1 1.7 1.5 1.5

Total Current Assets 515.0 1,032.6 950.5 1,029.0 Market Cap / Sales 1.9 1.5 1.2 1.1 Creditors 365.5 1,081.1 1,333.2 1,577.3 Price to Book Value 1.8 1.5 1.2 1.1 Provisions 27.5 21.1 53.3 63.1 Solvency Ratios Total Current Liabilities 393.0 1,102.2 1,386.6 1,640.3 Debt/EBITDA 1.3 1.2 1.3 1.6 Net Current Assets 122.0 -69.6 -436.1 -611.3 Debt / Equity 0.3 0.3 0.3 0.4 Ot her Non Current Assets 50.7 3.8 3.8 3.8 Current Ratio 0.9 0.8 0.7 0.6 Application of Funds 1,800.4 2,166.4 2,593.4 3,111.5 Quick Ratio 0.9 0.7 0.6 0.5

Source: Company, ICICIdirect.com Research Source: Company, ICICIdirect.com Research

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ICICIdirect.com coverage universe (Media)

CMP M Cap EPS (|) P/E (x) EV/EBITDA (x) RoCE (%) RoE (%) Sector / Company (|) TP(|) Rating (| Cr) FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E DB Corp (DBCORP) 320 305 Hold 5,882 17.2 16.2 17.9 18.6 19.8 17.9 10.3 10.7 9.6 33.2 27.8 26.9 24.6 19.8 19.4 DISH TV (DISHTV) 103 115 Hold 10,962 0.0 2.2 3.1 NA 46.4 33.0 16.4 11.8 9.8 15.4 35.3 38.5 NM NM 130.26 ENIL (ENTNET) 657 734 Hold 3,134 22.2 22.1 22.9 29.6 29.7 28.7 18.7 20.1 15.4 21.4 14.9 15.6 15.7 13.5 12.4 Eros (EROINT) 235 311 Buy 2,177 26.7 31.3 31.1 8.8 7.5 7.6 7.0 6.2 6.0 16.7 17.7 16.2 16.7 16.6 14.1 Hathway Cables (HATCAB) 43 36 Sell 3,546 -2.2 -2.1 -1.1 NM NM NM 18.6 14.1 11.1 NM 0.4 3.2 NM NM NM HT Media (HTMED) 77 86 Hold 1,798 7.7 6.4 7.8 9.9 12.0 9.8 6.5 7.1 5.2 13.5 11.1 12.8 10.0 7.3 8.3 Inox Leisure (INOX) 228 274 Buy 2,092 2.2 7.0 10.2 104.4 32.8 22.3 18.6 11.4 8.6 6.0 12.3 15.1 3.1 8.6 11.2 Jagran Prakashan (JAGPRA) 143 168 Buy 4,678 9.7 13.0 10.5 14.7 11.0 13.6 10.2 8.0 6.3 21.1 22.6 23.563 21.9 21.9 19.5 PVR (PVRLIM) 828 1,017 Buy 3,854 3.1 25.8 26.3 269.3 32.1 31.5 22.4 12.2 11.1 8.3 15.5 14.8 3.6 15.2 13.4 Sun TV (SUNTV) 382 384 Hold 15,034 19.8 23.1 27.4 19.2 16.5 13.9 8.3 7.4 6.3 33.0 36.1 38.5 22.7 24.8 26.6 TV Today (TVTNET) 256 310 Buy 1,528 13.6 17.0 20.7 18.9 15.1 12.4 8.5 6.5 5.0 27.5 28.3 29.0 18.0 18.9 19.3 ZEE Ent. (ZEETEL) 396 410 Hold 38,063 10.2 11.0 13.7 38.9 36.0 29.0 29.1 25.3 19.8 25.3 25.0 26.2 17.6 16.9 17.5 Source: Company, ICICIdirect.com Research

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RATING RATIONALE ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock.

Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction; Buy: >10%/15% for large caps/midcaps, respectively; Hold: Up to +/-10%; Sell: -10% or more;

Pankaj Pandey Head – Research [email protected]

ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai – 400 093 [email protected]

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ANALYST CERTIFICATION We /I, Bhupendra Tiwary MBA, Sneha Agarwal, MBA Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Terms & conditions and other disclosures: ICICI Securities Limited is a Sebi registered Research Analyst having registration no. INH000000990. ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India’s largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (“associates”), the details in respect of which are available on www.icicibank.com.

ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.

The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securitiesis is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances.

This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice.

ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months.

ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction.

ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned in the report in the past twelve months.

ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts have any material conflict of interest at the time of publication of this report.

It is confirmed that Bhupendra Tiwary MBA, Sneha Agarwal, MBA, Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months.

Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.

ICICI Securities or its subsidiaries collectively or Research Analysts do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report.

Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report.

It is confirmed that Bhupendra Tiwary MBA, MBA Sneha Agarwal, MBA, Research Analysts do not serve as an officer, director or employee of the companies mentioned in the report.

ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.

Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report.

We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities.

This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.

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