Result Update November 16, 2016

Rating matrix Rating : Buy (EROINT) | 165 Target : | 190 Target Period : 12 months Potential Upside : 15% Strong content pipeline in FY18E…

• Revenues came in at | 478.8 crore, down 5.2% YoY and up 17.3% What’s changed? QoQ vs. our estimate of | 430.6 crore. The delta was owing to Target Changed from | 225 to | 190 recognition of overseas revenues at 48% of production costs of the EPS FY17E Changed from | 22.1 to | 21 films under the revised Relationship Agreement with the parent with EPS FY18E Changed from | 28.2 to | 23.7 Rating Changed from Hold to Buy effect from April 1, 2016 vs. 39% earlier. The impact of Q1FY17 overseas revenues also seem to be incorporated in the Q2FY17 Quarterly performance numbers. Consequently, overseas revenues formed 39.1% of overall Q2FY17 Q2FY16 YoY (%) Q1FY17 QoQ (%) revenues. Furthermore, the company recognised satellite sales of Revenue 478.8 504.9 -5.2 408.2 17.3 Dishoom, Housefull 3 and Sardaar Gabbar Singh (Hindi) in Q2FY17. EBITDA 89.2 135.8 (34.3) 81.0 10.2 The domestic theatrical, however, remained soft at | 171.4 crore EBITDA (%) 18.6 26.9 -825 bps 19.8 -121 bps (~35.8% of the revenues) vs. our estimate of | 203 crore PAT 63.0 90.4 (30.3) 58.9 7.0 • EBITDA came in at | 89.2 crore vs. our expectation of | 75.5 crore Key financials with margins at 18.6% (estimated 17.5%). Margins came in higher | Crore FY15 FY16 FY17E FY18E than estimated owing to positive operating leverage driven by Net Sales 1,421 1,583 1,621 2,103 superior overseas revenues recognition EBITDA 349 324 299 433 • PAT came in at | 63 crore, higher than our estimate of | 45.4 crore. Net Profit 247 214 196 222 The beat was due to superior revenues and margins EPS (|) 26.7 22.9 21.0 23.7 Post tough FY17, FY18 to be better…

Valuation summary Eros, a producer/distributor, has a large film library of over 2000 films. FY15 FY16 FY17E FY18E The company has also launched Trinity Pictures to focus on franchise P/E 6.27.27.97.0films. The first movie from the arm is likely to get released by FY18E. The Target P/E 7.1 8.3 9.1 8.0 company released 63 movies in FY16 across Hindi, Tamil/Telugu and EV / EBITDA5.45.17.45.7other languages. Eros continues to get its movie selection right and P/BV 1.0 0.9 0.8 0.7 boasts of blockbusters such as , Bajirao Mastani, Tanu RoNW 16.7 12.1 10.5 10.6 Weds Manu Returns from its stable. Hence, FY16 saw 28.0% YoY growth RoCE 16.2 13.5 10.6 12.9 in domestic theatrical revenues to | 693.2 crore. FY17 has been a rather Stock data quiet year in terms of box office performance on a high base of FY16. Particular Amount Thus, we expect muted domestic theatrical collections of | 654.3 crore in Market Capitalization (| Crore) 1,546.7 FY17E. We also expect Eros to postpone a few of its H2FY17 releases Total Debt (FY16) (| Crore) 421.3 owing to “demonetisation” move impacting footfalls in theatres. However, Cash (FY16) (| Crore) 304.2 going ahead with strong movie slate of 2 (overseas), Badlapur 2, EV 1,663.9 Sarkaar Raj 3, untitled Shah Rukh Khan movie among others, we expect 52 week H/L 247/ 126 domestic theatrical revenues of | 709.1 crore in FY18E. Equity capital 92.5 Face value 10 Delivering on clearer transfer pricing terms… As per transfer pricing changes, the overseas rights including global

digital media rights to Eros International Plc, are to be now transferred at

40% of production cost of each film with an additional mark-up of 20%

vs. 30% of production cost with a mark-up of 30.0% earlier. During the

quarter, overseas revenues were recognised under the revised Relationship Agreement with the parent. The impact of Q1FY17 overseas

revenues was also incorporated in the Q2FY17 numbers. Eros will

also hold an equity stake of 10-15% in the global digital business

structure at a marginal cost. Hence, it can participate in the long term

value creation of the ErosNow business. We have not assigned any value to Eros Now currently as revenues remain marginal/unclear as of now.

FY18 line-up to cheer earnings; upgrade to BUY The company has done its best to come clear of the recent allegations. Research Analyst The new transfer pricing mechanism is an added positive. We continue to Bhupendra Tiwary await clarity on the Eros Now potential and rationale for 10-15% stake. [email protected] We value Eros at 8x FY18E EPS arriving at a target price of | 190. We Sneha Agarwal upgrade the stock to BUY recommendation as we believe that most [email protected] negatives seem to be priced in. Furthermore, a strong FY18 pipeline also bodes well for the company, going ahead.

ICICI Securities Ltd | Retail Equity Research

Variance analysis esl Q2FY17 Q2FY17E Q2FY16 Q1FY17 YoY (%) QoQ (%) Comments Revenue 478.8 430.6 504.9 408.2 -5.2 17.3 The delta was owing to recognition of overseas revenues at 48% of the production costs of the films under the revised Relationship Agreement with the parent wef 1st April, 2016 vs 39% earlier. The impact of Q1FY17 overseas revenues also seem to be incorporated into the Q2FY17 numbers. Other Income 9.9 2.5 5.1 2.2 96.1 353.9

Raw Material Expenses 0.0 0.0 0.0 0.0 NA NA Employee Expenses 16.6 17.7 14.2 17.5 16.9 -5.1 Administrative Expenses 65.0 21.5 13.8 63.9 370.8 1.8 Operating Expenses 276.3 315.9 340.7 275.0 -18.9 0.5

Changes in inventories of finished goo 31.7 0.0 0.4 -29.2 7,106.8 -208.7

EBITDA 89.2 75.5 135.8 81.0 -34.3 10.2 EBITDA Margin (%) 18.6 17.5 26.9 19.8 -825 bps -121 bps Margins came in higher than estimated owing positive operating leverage driven by superior overseas revenues recognition. Depreciation 2.0 2.2 1.7 2.2 16.9 -7.8 Interest 10.7 10.3 10.5 9.4 1.8 13.4

Total Tax 24.0 19.7 37.5 18.1 -36.0 32.2 PAT 63.0 45.4 90.4 58.9 -30.3 7.0 PAT came in higher than estimates due to superior revenues and margins.

Source: Company, ICICIdirect.com Research

Change in estimates FY17E FY18E (| Crore) Old New % Change Old New % Change Comments Revenue 1,679.6 1,621.3 -3.5 2,157.5 2,102.9 -2.5 We have further lowered our catalogue revenue estimates EBITDA 339.2 299.2 -11.8 498.5 433.4 -13.1 EBITDA Margin (%) 20.2 18.5 -175 bps 23.1 20.6 -249 bps The lower margin estimate is owing to cut in topline PAT 206.8 196.4 -5.0 263.6 221.8 -15.9 EPS (|) 22.1 21.0 -5.0 28.2 23.7 -16.0

Source: Company, ICICIdirect.com Research

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Company Analysis Strong content pipeline for FY18E The company released 63 movies in FY16 across Hindi, Tamil/Telugu and other languages, of which six were high budget, 16 were medium budget and 41 low budget movies. The company continues to get its movie selection right, evident from its presence in three out of top four box office releases. Bajrangi Bhaijaan, Bajirao Mastani, Tanu Weds Manu Returns and Welcome Back were superhits in FY16. 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), Aagadu (Telugu), Kaththi (Tamil), etc. Hence, FY16 saw 28.0% YoY growth in domestic theatrical revenues to | 693.2 crore.

Going into FY17, it has been a rather quiet year both in terms of box office performance and the fact that it is on a high base of FY16. Thus, we expect muted domestic theatrical collections of | 654.3 crore. We also expect the company to postpone few of the H2FY17 releases on the back of demonetisation move impacting footfalls in theatres. However, going ahead, with a strong movie slate such as Kahaani 2 (overseas), Badlapur 2, Sarkaar Raj 3, untitled Shah Rukh Khan movie among other, we expect domestic theatrical revenues of | 709.1 crore in FY18E.

Exhibit 1: Content pipeline Movie name Language Starcast / (Director) Expected Kahani 2 (overseas) Hindi Vidya Balan, Arjun Rampal / (Sujoy Ghosh) Q3 FY17 Rock On 2 Hindi Farhan Akhtar, Arjun Rampal / (Excel / Shujaat Saudagar) Q3 FY17 Chaar Sahibzaade 2 Punjabi 3D Animation / (Harry Baweja) Q3FY17 Amar Prem ( Bengali Rudra, Shivangi / (Haranath Chakraborty) Q3 FY17 Double Faluda Bengali Feluda, Topse / (Sandip Ray) Q3 FY17 Enkitta Mothathe Tamil Nataraj Subramanian, Parvathy Nair, Sanchitta,Radha Ravi, Rajaji / (Ramu Chellapa) Q3 FY17 Saarkar Raj 3 Hindi Amitabh Bachchan, Ronit Roy & Others / (Ram Gopal Verma) Q4 FY17 Ticket to Bollywood Hindi Amyra Dastoor, Diganth Manchale / (Eros) Q4 FY17 7 Kadam Hindi Amit Saadh, Diksha Seth, Ronit Roy & Others / (Mohit Kumar Jha) Q4 FY17 Oru Kidayin Karunai Manu Tamil Vidharth, Raveena / (Suresh Sangiah) Q4 FY17 Bibaho Diaries Bengali Ritwick Chakraborty, Sohini Sarkar / (Moinak Bhowmik) Q4 FY17 Care of Saira Banu Malayalam Manju Warrier, Amala Akineni, Shanenigam / (Antony Sony) Q4 FY17 Untitled Hindi Shahrukh Khan / (Anand L Rai ‐Color Yellow Productions) FY2018 Munna Michael Hindi Tiger Shroff, Nawazuddin Siddiqui / (Sabbir Khan) FY2018 Chanda Mama Door Ke Hindi Sushant Singh / (Sanjay Puran Singh) FY2018 Untitled Hindi Sushant Singh/ Homi Adjania (Maddock Films) FY2018 Sniff Hindi Amole Gupte / (Trinity Pictures) FY2018 Azaad Hindi Sabbir Khan / (Trinity Pictures) FY2018 Buddy Cop Bilingual Krish / (Trinity Pictures) FY2018 Hathi Mera Sathi Hindi Prabhu Soloman / (Trinity Pictures) FY2018 Love in Beijing Indo‐China Siddharth Anand / (Trinity Pictures) FY2018 The Zoo Keeper Indo‐China Kabir Khan / (Trinity Pictures) FY2018 Untitled Hindi Vicky Kaushal, Shewta Tripathi / (Colour Yellow Productions) FY2018 Happy Bhaag Jayegi 2 Hindi Mudassar Aziz / (Colour Yellow Productions) FY2018 Vicky Donor 2 Hindi TBA FY2018 Manmarziyan Hindi Ayushmann Khuranna & Bhumi Pednekar / (Colour Yellow) FY2018 Reunion Hindi Sujoy Ghosh FY2018 Bhavesh Joshi Hindi Harshwardhan Kapoor, / (Vikramaditya Motwane) FY2018 Farzi Hindi Raj & DK FY2018 Badlapur 2 Hindi Sriram Raghavan FY2018

Source: Company, ICICIdirect.com Research

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Reduced receivables, B/S improves, catalogue sales to rise Catalogue revenues have longer payment cycles associated with them. In FY16, the company had deferred sales for a couple of quarters to enable the receivables position to normalise. Eros was indeed able to bring down receivables from | 525.7 crore (FY15) to | 428.2 crore (FY16). Hence, the number of days has come down from 135 to 98 over the same period. Eros indicated that there were renewed deals with shorter payment cycles and catalogue revenues would again rebound to 20% and 25% of revenues in FY17E and FY18, respectively, from 15.0% in FY16. Improved transfer pricing arrangement with parent Based on a detailed transfer pricing study by a Big four accounting firm, the company has made certain changes in its existing relationship agreement with its parent Eros International Plc. Consequently, the company will transfer the overseas rights including global digital media rights to Eros International Plc, or its subsidiaries at an amount equal to 40% of production cost of each film with an additional mark-up of 20% vs. 30% of production cost at an additional 30% mark-up earlier.

If a movie costs | 100 crore, the parent will be billed for | 48 crore (| 100 crore*40%*1.2), henceforth, vs. | 39 crore (| 100 crore*30%*1.3) initially. The arrangement leads to additional revenues from overseas rights (~23% higher than the earlier arrangement). The deal also leads to certain changes in the amortisation schedule. The cost of movie production will be amortised to the extent of 76% in the first year in this arrangement vs. 72% earlier. During the quarter, overseas revenues were recognised at 48% of the production costs of the films under the revised Relationship Agreement with the parent with effect from April 1, 2016 vs. 39% earlier. The impact of Q1FY17 overseas revenues was also incorporated in the Q2FY17 numbers.

Additionally, the Eros India group will hold an equity stake of 10-15% of the global digital business structure to participate in the long term value creation of the ErosNow business, any future value enhancement, stake divestment, IPO, etc. Foraying into Chinese market Eros has entered into partnerships with three Chinese film companies to explore joint opportunities such as promotion, co-production, distribution and unlocking value in respective intellectual properties for Sino-Indian films across all platforms in both countries. The company is currently seeing visibility of two projects cumulatively amounting to $35 million half of which will be financed by Eros and the other half by the Chinese counterpart. The company is also looking forward to the release of Bajirao Mastani in Chinese markets. Since the revenue potential from the Chinese markets remains unclear as of now we have not included the same in our estimates.

Balance sheet improvement on track… 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 company had then guided about marked improvement in its receivables situation and better free cash flow generation.

The total receivables were at | 428.2 crore in FY16 compared to | 525.7 crore in FY15. In terms of debtor days, receivables improved to 97.5 days as on March 31, 2016 vs. 133 days on March 31, 2015.

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Valuation The company has done its best to come clear of the recent allegations. The new transfer pricing mechanism is an added positive. We continue to await clarity on the Eros Now potential and rationale for 10-15% stake. We value Eros at 8x FY18E EPS arriving at a target price of | 190 and upgrade the stock to BUY as we believe that most of the negatives seem to be priced in. Furthermore, a strong FY18 pipeline also bodes well for the company, going ahead.

Exhibit 2: Valuations Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE (| cr) (%) (|) (%) (x) (x) (%) (%) FY15 1421.2 25.2 26.7 23.0 6.2 5.4 16.7 16.2 FY16 1582.7 11.4 22.9 -14.3 7.2 5.1 12.1 13.5 FY17E 1621.3 2.4 21.0 -8.3 7.9 7.4 10.5 10.6 FY18E 2102.9 29.7 23.7 12.9 7.0 5.7 10.6 12.9

Source: Company, ICICIdirect.com Research

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Recommendation History versus Consensus estimates

700 90.0 80.0 600 70.0 500 60.0 50.0 (|) 400 40.0 (%) 300 30.0 20.0 200 10.0 100 0.0 Nov-14 Jan-15 Mar-15 Jun-15 Aug-15 Nov-15 Jan-16 Apr-16 Jun-16 Aug-16 Nov-16

Price Idirect target Consensus Target Mean % Consensus with BUY

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 Mahesh Babu'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-15 Dec-15 Mar-16 Jun-16 Sep-16 1 Eros Worldwide FZ, L.L.C. 30-Sep-16 50.4 47.13M 0.0 Promoter 73.66 73.57 73.55 73.54 73.54 2 Eros Digital Pvt. Ltd. 30-Sep-16 23.2 21.70M 0.0 FII 20.48 13.21 13.68 12.80 12.72 3 Norges Bank Investment Management (NBIM) 30-Sep-16 2.4 2.23M 0.0 DII 0.08 0.14 0.08 0.10 0.11 4 Jupiter Asset Management Ltd. 31-Jul-16 1.4 1.32M +0.01M Others 5.78 13.08 12.69 13.56 13.63 5 Dimensional Fund Advisors, L.P. 31-Aug-16 1.2 1.08M 0.0 6 Grandeur Peak Global Advisors, LLC 31-Jul-16 1.1 1.05M -0.12M 7 Manulife Asset Management (Asia) 31-Mar-15 1.1 1.03M +0.42M 8 Octopus Investments Limited 30-Apr-15 0.5 0.44M +0.24M 9 Van Eck Associates Corporation 30-Sep-16 0.2 0.22M +0.00M 10 Danske Invest Management Company S.A. 30-Apr-16 0.1 0.13M 0.0

Source: Reuters, ICICIdirect.com Research

Recent Activity Buys Sells Investor name Value Shares Investor name Value Shares Jupiter Asset Management Ltd. +0.05M +0.01M Firth Investment Management Pte. Ltd. -0.36M -0.14M Boston Partners +0.01M +0.00M Russell Investments Limited -0.33M -0.12M Van Eck Associates Corporation +0.00M +0.00M Grandeur Peak Global Advisors, LLC -0.40M -0.12M State Street Global Advisors (US) +0.00M +0.00M Mellon Capital Management Corporation -0.23M -0.07M RAM Active Investments S.A. -0.22M -0.07M tekle Source: Reuters, ICICIdirect.com Research

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Financial summary

Profit and loss statement | Crore Cash flow statement | Crore (Year-end March) FY15 FY16 FY17E FY18E (Year-end March) FY15 FY16 FY17E FY18E Total operating Income 1,421.2 1,582.7 1,621.3 2,102.9 Profit after Tax 247.1 214.2 196.4 221.8 Growth (%) 25.2 11.4 2.4 29.7 Add: Depreciation & Amortization 6.9 7.5 8.1 10.5 Operating Expenses 1,072.9 1,011.3 1,042.8 1,501.3 Add: Interest Paid 38.4 33.9 44.4 77.3 Employee Expenses 35.9 55.7 59.8 84.1 (Inc)/dec in Current Assets -506.1 167.0 -17.1 -161.9 Administrative Expenses 96.7 58.1 216.9 84.1 Inc/(dec) in CL and Provisions 642.8 93.5 27.6 343.6 Change in inventory& Other exp. (132.9) 133.5 2.5 - CF from operating activities 429.0 515.9 259.5 491.3 Total Operating Expenditure 1,072.6 1,258.6 1,322.1 1,669.6 (Inc)/dec in Fixed Asset -619.4 -373.6 -650.0 -700.0 EBITDA 348.6 324.1 299.2 433.4 Others 109.3 24.7 -4.4 3.2 Growth (%) 16.3 -7.0 -7.7 44.8 CF from investing activities -510.1 -348.9 -654.4 -696.8 Depreciation 6.9 7.5 8.1 10.5 Issue/(Buy back) of Equity 0.5 1.1 0.0 0.0 Interest 38.4 33.9 44.4 77.3 Inc/(dec) in loan funds 108.3 -70.1 325.0 225.0 Other Income 19.9 20.9 17.1 10.0 Divi dend & div idend tax - - - -

PBT 323.2 303.6 263.8 355.6 Interest Paid 38.4 33.9 44.4 77.3 Total Tax 76.2 79.1 71.7 120.9 Others -12.4 36.5 -140.8 -77.3 Minority Interest (0.1) 10.4 (4.4) 12.9 CF from financing activities 96.4 -32.5 184.2 147.7 PAT 247.1 214.2 196.4 221.8 Net Cash flow 15.3 134.5 -210.7 -57.9 Growth (%) 23.7 -13.3 -8.3 12.9 Opening Cash 154.4 169.7 304.2 93.5 EPS (|) 26.7 22.9 21.0 23.7 Closing Cash 169.7 304.2 93.5 35.6

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

Balance sheet | Crore Key ratios (Year-end March) FY15 FY16 FY17E FY18E (Year-end March) FY15 FY16 FY17E FY18E Liabilities Per share data (|) Equity Capital 92.5 93.6 93.6 93.6 EPS 26.7 22.9 21.0 23.7 ESOP's - - - - Cash EPS 27.5 23.7 21.9 24.8 Reserve and Surplus 1,389.7 1,674.2 1,774.3 1,996.1 BV 160.2 188.9 199.6 223.3 Total Shareholders funds 1,482.2 1,767.8 1,867.9 2,089.6 DPS 0.0 0.0 0.0 0.0 Total Debt 491.5 421.3 746.3 971.3 Cash Per Share 18.3 32.5 10.0 3.8

Other Non Current Liabilities 259.2 302.9 298.5 301.7 Operating Ratios (%)

Total Liabilities 2,232.9 2,492.0 2,912.7 3,362.6 EBITDA Margin 24.5 20.5 18.5 20.6 EBIT / Total Operating income 24.0 20.0 18.0 20.1

Assets PAT Margin 17.4 13.5 12.1 10.5

Gross Block 4,116.4 4,843.1 5,493.1 6,193.1 Inventory days 35.2 0.8 0.8 0.7 Less: Acc Depreciation 2,902.3 3,581.4 3,589.5 3,600.0 Debtor days 135.0 98.8 98.8 90.0 Net Block 1,214.1 1,261.7 1,903.6 2,593.1 Creditor days 260.6 249.5 249.5 249.5 Capital WIP 1,018.1 1,336.6 1,336.6 1,336.6 Return Ratios (%) Goodwill on consolidation 0.0 19.0 19.0 19.0 RoE 16.7 12.1 10.5 10.6 Investments 0.0 0.0 0.0 0.0 RoCE 16.2 13.5 10.6 12.9 Inventory 136.9 3.4 3.5 4.0 RoIC 32.7 38.0 19.9 21.4 Debtors 525.7 428.2 438.7 518.5 Valuation Ratios (x) Loans and Advances 184.0 232.6 238.3 309.0 P/E 6.2 7.2 7.9 7.0 Other Current Assets 20.1 35.5 36.4 47.2 EV / EBITDA 5.4 5.1 7.4 5.7 Cash 169.7 304.2 93.5 35.6 EV / Net Sales 1.3 1.1 1.4 1.2

Total Current Assets 1,036.4 1,003.9 810.3 914.3 Market Cap / Sales 1.1 1.0 1.0 0.7 Creditors 1,014.7 1,081.8 1,108.2 1,437.3 Price to Book Value 1.0 0.9 0.8 0.7 Provisions 21.1 47.5 48.6 63.1 Solvency Ratios Total Current Liabilities 1,035.8 1,129.2 1,156.8 1,500.4 Debt/EBITDA 1.4 1.3 2.5 2.2 Net Current Assets 0.6 -125.3 -346.5 -586.1 Debt / Equi ty 0.3 0.2 0.4 0.5 Other Non Current Assets 0.0 0.0 0.0 0.0 Current Ratio 0.8 0.6 0.6 0.6 Application of Funds 2,232.9 2,492.0 2,912.7 3,362.6 Quick Ratio 0.7 0.6 0.6 0.6

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) FY16E FY17E FY18E FY16E FY17E FY18E FY16E FY17E FY18E FY16E FY17E FY18E FY16E FY17E FY18E DB Corp (DBCORP) 370 455 Buy 6,795 16.1 21.3 25.2 22.9 17.4 14.7 12.8 9.4 7.9 29.9 31.8 32.5 22.0 23.7 23.9 DISH TV (DISHTV) 91 90 Hold 9,652 6.5 2.1 3.2 13.9 44.1 27.9 10.1 9.4 7.6 31.1 30.5 40.2 181.9 36.6 36.6 ENIL (ENTNET) 705 790 Hold 3,361 21.0 15.5 22.5 33.6 45.6 31.3 21.6 21.7 15.3 14.5 12.6 16.2 13.0 8.8 11.5 Eros (EROINT) 165 190 Buy 1,544 22.9 21.0 23.7 7.2 7.9 7.0 5.1 7.3 5.7 13.5 10.6 12.9 12.1 10.5 10.6 HT Media (HTMED) 75 80 Hold 1,743 7.2 6.6 7.3 10.4 11.4 10.3 6.6 4.6 3.6 10.7 12.3 12.3 8.2 6.9 7.2 Inox Leisure (INOX) 232 270 Hold 2,132 8.4 6.5 9.7 27.5 35.9 23.9 12.2 12.6 9.6 11.1 9.9 12.8 10.9 7.3 9.9 Jagran Prakashan 179 220 Buy 5,853 13.6 12.5 14.7 13.2 14.3 12.2 10.2 8.4 6.7 23.9 26.7 28.3 22.5 22.1 21.8 PVR (PVRLIM) 1,120 1,375 Buy 5,233 25.4 24.6 32.6 44.0 45.5 34.3 16.6 14.5 11.6 15.6 14.9 17.6 14.3 11.9 13.6 Sun TV (SUNTV) 489 560 Buy 19,263 23.2 27.0 31.1 21.1 18.1 15.7 10.1 9.1 7.9 36.1 39.5 42.3 24.9 27.5 29.3 TV Today (TVTNET) 299 363 Buy 1,786 15.8 18.8 24.1 18.9 16.0 12.4 11.1 8.7 6.7 27.6 27.3 29.5 17.7 18.0 19.5 ZEE Ent. (ZEEENT) 454 583 Buy 43,554 10.7 12.3 17.5 42.4 36.9 25.9 27.7 21.3 17.1 25.9 26.0 29.0 16.8 16.2 19.2 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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