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Shemaroo makes a quiet debut; lists with 5.9% premium, ends day 1 almost flat

01 October, 2014

Media content house Shemaroo Entertainment saw a modest debut listing at Rs 180 a share, a premium of 5.9 per cent to the issue price of Rs 170 a share. It ended the first day at Rs 171 a share.

The company’s initial public offer (IPO) was subscribed 7.4x or oversubscribed 6.4x with all segments of the investors pitching in with retail investors leading the pack.

The two recent issues of Sharda CropChem and Snowman Logistics saw blockbuster debuts on the bourses after both IPOs were oversubscribed 59x.

Unlike the two previous listings, Shemaroo doesn’t count any private equity investor. Wonderla Holidays which went public in the month of May, did not count a PE firm as investor but attracted TVS Capital and Aditya Birla PE as anchor investors during the IPO.

Here’s a snapshot of the IPO

– Issue opened on September 16; closed on September 18.

— Issue price band Rs 155-170 per share; issue price Rs 170/share.

— Public offer of up to 8.04 million shares including portion reserved for anchor investment.

— Equity dilution of 28 per cent, valuing the firm at around Rs 475 crore ($78 million).

– Yes Bank and ICICI Securities managed the issue.

Who lapped up the issue

– QIB portion was subscribed 5.7x almost fully led by foreign institutional investors while domestic FIs largely stayed away from the issue.

– HNIs & corporate bodies bid for around 8.6 times the portion reserved for them. Bulk of this was by corporate bodies although HNIs also bid for more shares than the block for the entire investor category.

– Retail investors, for whom over half of the public issue (excluding shares allocated under anchor investment) was reserved, bid for 7.4x their portion, easily letting the IPO sail through.

Business

– Shemaroo is a content house and is into content acquisition, value addition to content and content distribution.

— In 1979, it set up India’s first video rental business and thereafter in 1987, forayed into distribution of content through the home video segment in the video home system (VHS) format. Over the years, it has expanded into content aggregation and distribution for broadcasting on television platforms. It is now looking at expansion into new media platforms.

– Its content library consists of more than 2,900 titles spanning new Hindi films like Queen, The Dirty Picture, Kahaani, OMG: Oh My God!, Black, Ishqiya, Slumdog Millionaire, Ajab Prem Ki Ghazab Kahani, Omkara, Dil Toh Baccha Hai, Chandni Chowk to China, Bheja Fry 2, amongst others. Hindi films classics like Zanjeer, Beta, Dil, Disco Dancer, Mughal-e-Azam, Amar Akbar Anthony, Namak Halaal, Kaalia, Madhumati etc; titles in various other regional languages like Marathi, Gujarati, Punjabi, Bengali among others as well as non-film content.

– Distributes content through various mediums such as satellite, terrestrial and cable television; new media platforms consisting of mobile, internet, direct to home (DTH) and other applications; home entertainment and other media.

– Its recent initiatives include tying up as an official channel partner for Google’s You Tube where it is managing 32 channels. It is also moving beyond providing just content, to providing content management solutions to partners including Tata DOCOMO’s video platform for 3G services and Airtel digital television in connection with an interactive devotional service, namely ‘iDarshan’.

Strategy

Its overall strategy is structured around its content library and its successful monetisation.

The key elements of its strategy include:

– Scaling up content library driven by return on investment

– Enhancing monetisation of content library through existing and emerging media platforms

– Enhancing revenue predictability through strategically packaged sales

– Optimizing content monetisation across its life-cycle

Use of IPO proceeds

The firm plans to use bulk of the money for working capital requirement.

Shareholders

– The company is promoted by Raman Maroo and Atul Maru. Maroo, who is also the managing director of the firm, has been involved in media and entertainment industry for approximately 30 years. He has been instrumental in the firm’s expansion into television rights syndication as well as transformation of Shemaroo into a content house. Maru is the joint MD and spearheads the home video entertainment unit of the firm.

– The firm also has a string of other minority individual shareholders including Jayesh Parekh, one of the founders of Sony Entertainment Television India, and currently associated with VC firm Jungle Ventures.

Financials

Its consolidated total income, EBITDA and profit after tax for FY14 was Rs 265.95 crore, Rs 65.68 crore and Rs 27.26 crore respectively, representing growth of 23.07 per cent, 11.89 per cent and 16.32 per cent respectively, as compared to the previous year.


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Shemaroo makes a quiet debut; lists with 5.9% premium, ends day 1 almost flat

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