Indian movie distribution arm of AIM-listed Eros International Plc plans to raise Rs 350 crore through its public float and has set the price band at Rs 158-175 per share. This will mean around 20% equity dilution that will value the company in the range of Rs 1,470-1,600 crore.
The firm intends to use the money to acquire and co-produce Indian films, including primarily Hindi language films as well as certain Tamil and other regional language films.
Eros acquires films from third-parties, through co-productions and occasionally, through own productions. After acquiring, Eros exploits the film content through multiple formats such as theatres, home entertainment (DVD, VCD), cable & satellite rights and new media formats. Eros has given box-office hits like Love Aaj Kal, Om Shanti Om, Partner and Cheeni Kum and has over 1,000 Indian films in its library.
It is part of Eros group that is led by Lulla business family founded by Arjan Lulla and now handled by his two sons Sunil and Kishore. While Sunil is vice chairman and managing director of Eros International Media Ltd, Kishore who is a British national handles the overseas businesses.
For the year ended March’10 it had total income of Rs 655 crore with net profit of Rs 82.3 crore. At the expanded capital base(upper end of the price band) the firm will have price earnings ratio of around 19 based on 2009-10 earnings, which can be considered reasonable. What could be a valuation concern is the earnings in quarter ended June 30 when the firm had net profit of Rs 15.5 crore on total revenue of Rs 128 crore.
Eros could be looking to emulate success of the Indian arm of another AIM-listed media firm. Animation and game art company DQ Entertainment made a successful stock exchange debut early this year listing with 69% premium to issue price of Rs 80/share and is currently trading at Rs 103.
Enam Securities, Kotak Mahindra Capital, Morgan Stanley India and RBS Equities (India) are lead book running managers of the issue that opens for the public on Friday.