Shemaroo Entertainment Ltd

Shemaroo Entertainment Ltd

Movies & Entertainment

Market Cap.: ₹ 1,138.25 Cr.

Current Price: ₹ 418.75

Book Value: ₹ 154.85

Dividend Yield: 0.33%

Face Value: ₹ 10.00

sales and profit increasing

Net Profit: 67.23

look good

One of the top 3 content aggregators in India, growing it’s youtube views rapidly (60-80% y/y) now at 100M page-views per month. Amazing business, and growth.

Check for management ethics and capability.

Today, we are one of the largest independent content

aggregators in Bollywood. Our Content Library consists of

over 3,400 titles spanning recent Hindi films like Jab We

Met, Ajab Prem Ki Ghazab Kahani, Om Shanti Om, Golmaal,

Dedh Ishqiya amongst others to all time blockbusters like

Beta, Dil, Disco Dancer, Bobby, Sarfarosh, Amar Akbar

Anthony, Namakl Halal, and evergreens like Madhumati,

to 10% of the revenues. Shemaroo typically participates

in the second and subsequent cycles of film monetization.

This phase is relatively lower in risk as movies’ connect

with audience is already established. The revenue in

https://www.youtube.com/user/ShemarooEnt/videos

https://www.youtube.com/user/shemaroomovies/videos

its maximum potential. Our content is today distributed

over various internet video platforms like YouTube,

Hooq, Hotstar, Apple iTunes, Google Play and Spuul. We

platforms. With the advent of 4G and better Broadband

14% projected growth of the sector for India

but I guess shemaroo will initially take the bigger chunk

with digital rev in india more ways to monetize this.

Why not open a movie channel in India ?

Management salary not much so good.

No real futuristic steps nothing looks too promising except business model can be good. They can think of so many ways to monetize the movie rights or not so?

The business has potential to grow at much faster rate > 30%-50% y/y next few years.

This whole entertainment space is full of corrupt people and Eros Entertainment was recently under the for cooking the books. New copyright purchase of movies can be source of black money? There is no break-up for this.

I think perpetual rights are good property where you have rights for lifetime rented rights can be loss business if in given period It doesn’t generate enough revenue.

With 4G people watching the content will increase but will that actually transforms into profit is a good question. In India with so much piracy very less chance of people paying directly. Advertisement in between content is a good model but is that enough? Mobile ads, It is like those click to purchase banner ads. Is this advertisement business sustainable? Business to DTH operators tv channels is good.

If company is generating cash right now with the current model it will generate more cash when same model is going to expand with growing 4G and mobile users. Isn’t it?

They are not into big banner new releases which are risky and lead to unpredictable and volatile earnings.

When you are purchasing rights of old movies , you already know whether the movie is good or bad, what kind of audience would enjoy watching such movies and i believe that the management would have an idea of the kind of revenue the movie would generate for them.

Entry of Netflix is also a positive. Launch of home video on Airtel and Tata Sky is a positive. Company seems to have done well on capitalising the digiital segment.

Now netflix etc will buy rights for these ?

Zubin Dubash is a Senior leader with 20+ years of success in managing businesses in mobile applications, telecom, and digital domains. Before joining Shemaroo Entertainment Ltd, he was working in the core team of Apps Daily Solutions, as Chief Product & Strategy Officer and played an active role in product creation/innovation, strategy and Strategic partnerships. Prior to this he was at Tata Docomo as Vice President/Group Head- New Businesses. He has also worked with companies like Vodafone etc earlier.

Pros:

1.Content bank(which they can loan out to the netflixs and hotstars of the world)

2.Youtube channel(great subscriber count and hence a ready made audience)

3.Their domain knowledge which allows them to find sources to milk their assets such as:

4 Dish,tata sky and other packaged offerings

5. Splicing content from movies into clips and other compilations to drive viewership

Possible avenues of revenue in the future:Their film themed merchandise called yedaz which they are experimenting with now looks very interesting.

Film Merchandise is a huge industry overseas and my sense is that india should soon jump on that bandwagon. Their huge range of content rights the hold should hold them in good stead here.

Business model is tough to understand not sure what happen with amazon prime and netflix

New player can send Shemaroo out of business right away isn’t it. They are huge Amazon Prime/Netflix they are more experienced technically advanced. Also old movies become worthless as the number of new big banner movies are increasing.

Youtube pays almost 50% of advertising revenue to content provider. I see bumper increase in new media for Shemaroo.

Shemaroo owns a Youtube channel Filmi Gaane2 which has 1.38 million subscribers.

Songs are significantly more popular than movies .

Uses industry sources to Estimate how much Gangam style made on YouTube. Roughly 1 million dollars for 1 billion views.

Donald is invested with 10% of his portfolio many investors from Valuepickr are invested but it doesn’t look very nice to me. I mean not like game changing for long term I guess it is like average stock with may be 2-3 years of growth prospect.

In Donald’s words

Whenever we come across what seems like a superior business – we like to immediately ask – Isko hilaega kaun how difficult is it to dislodge this business from its perch?

If we find, We can’t find an easy answer to that, that’s a very good sign

If the answer to that is Yes – very very difficult to dislodge, then we like to get a feel for – If the Management can execute well, Where is this business likely to be, in next 2-3 years?

Deliberating on above, if we find “Hey, should it continue to execute well, this business will be at a different level in 2-3 years **” – that’s probably pointing to a winner

3.What leads to superior stock market returns? Most folks answer that with different nuances, but if we think clearly – there is only one definitive answer

That there’s probably a GAP between how the business is being perceived today versus where the business is likely to be in 2-3 years time.

Ayush & Hitesh taught us how to relax the thresholds a bit – when we detect a business in transition – as long as there are sure-shot signs of improving trends. If we can’t do that and remain rigid, we would always miss out on an Avanti Feeds, and an Atul Auto, even an Ajanta Pharma – while in transition to those wonderful EPA numbers they soon start spewing out – remember how the numbers transformed!! If they somehow continue to execute well, these are usually the fastest wealth creators too!!

Doing a simple DCF (7.2 cr growing at 10% for 20 years @ 18% Discount rate) this comes to about 426 cr. The company already is at a market cap of 1000 cr.

If we just go by copy paste copy cat a good business numbers are also good .. business overall is good but I am not sure about profit.. and also with new big players how this will play out..

Can take a position though just for the sake of it .. need to bring this in circle of competency the business is less understood..

Tv is only thing I see can be profitable but tv business is bad in India too much latest content

what about management check there annual report how good is management? family owned or now?

are they thinking about new endeavor inventing things

\The parent company have some partially owned subsidiary LLP. Is that alarming can profit be compromised by this?

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