No love for EROS

EROS (Eros International) issued its finals today, sending the shares down 13%, against an admittedly weak market where the ASXX was down nearly 3%.

Eros International Plc (Eros) is an integrated media and entertainment company. The Company is engaged in the acquisition, co-production and distribution of Indian films and related content.

I wrote about them in August 2012, and 6 months before that. I noted that Mr. Market “still” smelt a rat on the shares. Unfortunately, that distinct smell of rat is still with us. EPS was down 29% despite revenues being up 3% in Sterling terms. ROE is an abysmal 6%, and the number of shares in issue is up significantly. Nearly half the market cap has been spent on capex. That’s “quite a lot”, I would say in my understated British way.

Truly terrible. At a PE of 11.3, I see plenty of scope for a de-rating. Analysts have estimated 95% growth in EPS for 2014. I remain highly sceptical about that, though. As a poster on ADVFN notes: “It’s been 4 years now since they first announced their intentions to move from AIM to a main market! Still no firm timetable”.

Return On Equity keeps sliding and sliding – a common feature of these sorts of companies that leave investors nursing heavy losses. Debtors days are creeping up a little, although they are nowhere near the absurd proportions of DQE, whose debtors days is more than a year.

The company mentioned “game-chaning HBO collaboration”, “consistent box office track record” and lots of other stuff that should have sent the share price higher, but didn’t.

Gross margins are down, which is disappointing.

Hey ho. Foreign company. AIM-listed. ’nuff said.

Avoid. Or, beings as it’s an Indian company: Untouchable.

204p.

About mcturra2000

Computer programmer living in Scotland.
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