Eros Share Discussion Threads

[monkeymagic3] 17/12/2013 16:50

speedsgh - you are quite right, my mistake. There were no biscuits at the signing ceremony.

[mdara] 17/12/2013 16:43

@daphe2
Succinct but 100% accurate (to date anyway)

[daphe2] 17/12/2013 16:37

What a crock.......

[speedsgh] 13/12/2013 18:53

monkey - that's a rather bold allegation you make there. might be worth retracting/deleting even if it was made in jest unless you are happy to potentially face EROS in court.

[monkeymagic3] 13/12/2013 18:34

I agree speed agh. I hear the EROS directors even smeared the IPO documents with their own excrement such was their contempt for the market. Not very professional and likely to affected the taste of the biscuits at the signing ceremony.

[speedsgh] 13/12/2013 17:58

hadn't looked at the share price for a few days. it appears that it has weakened somewhat. not much sign of US investors ascribing higher value to the EROS investment proposition so far.

the way the IPO was handled will not have made a good impression on either side of the pond. let's hope that time is a healer + that company performance proves doubters wrong because the handling of the whole IPO saga (2012 to date) has wreaked of greed + incompetence.

[jlo10] 09/12/2013 19:18

Another one

Deutsche Bank initiated coverage on Eros International Plc (NYSE: EROS) with a Buy. PT $20.00.

Foot in Mouth will supply the next one

[foot in mouth] 09/12/2013 17:37

jlo10, you beat me to it!!

[jlo10] 09/12/2013 16:45

Jeffereries initiates coverage on Eros International Plc (NYSE: EROS) with a Buy. PT $14.00.

"Eros is a pioneer in Indian filmed entertainment that is well positioned to capitalize on multiple growth opportunities within India and globally," analyst Randal Konik comments. "This is a company that provides exposure to a growing industry in an expanding economy at what we view as a favorable valuation."

Jefferies acted as a bookrunner on EROS' November IPO

FWIW

[rivaldo] 29/11/2013 16:02

Moving up this afternoon in the USA to $11.08.

Amazingly, Barclays have moved my holding back into my normal trading account, so I don't have to worry about International accounts or anything else. Excellent service!

[rivaldo] 27/11/2013 08:19

Great article from Simon Thompson, thanks. Agree with all of it.

I still see the same healthy upside, as Simon evidently does too. Given the great start to H2 the next update should be extremely positive.

And here's some news - the Singaporean sovereign wealth fund Temasek has acquired 7.38%, or 1.7m shares, in EROS in the US IPO:

[aishah] 25/11/2013 14:23

Yes, any good news with a small free float will ramp up the price. An IPO disaster nonetheless.

[foot in mouth] 25/11/2013 14:18

As posted on III today by Gwynfryn1:

Simon Thompsons' opinion post raises a lot of questions about the company's incredibly self serving management and total disregard of shareholders' interests:

I have to admit that I was shocked by how the IPO of Bollywood film producer EROS (NYSE: EROS) on the New York Stock Exchange panned out.

To recap, it is a company I have followed for sometime and a month ago advised buying the Aim-traded shares at 250p ahead of the IPO ('Time for some price action', 22 Oct 2013). Moreover, having assessed the pricing of the offer I remained positive in the run up to the IPO when the price had subsequently risen to 300p ('Get ready for some price action', 6 Nov 2013). I had good reason to be because as part of the IPO Eros planned to issue 12.5m 'A' ordinary shares at a price between $15 (£9.31) and $17 per share. Of these shares, 7.8m were to be issued by the company and a further 4.68m by selling shareholders.

The initial price range in New York reflected a proposed one-for-three consolidation of the existing Aim-traded ordinary shares in connection with the proposed listing. On this basis, post the listing there would be 51.4m shares in issue, giving Eros a market value of between $771m to $871m.

This implied a price range of 931p to 1,056p per 'A' ordinary share listed on the NYSE, which equated to a price range of between 310p and 352p per Eros ordinary share listed on Aim prior to the share consolidation. So the investment risk definitely looked favourable as there was potentially 17 per cent upside by buying the ordinary shares on Aim in early November and selling them in New York, assuming of course the investment bankers could get the IPO away.

However, clearly demand for the shares was far more subdued than either the directors had anticipated or, for that matter, the investment bankers leading the IPO had guided the board to expect. In fact, the IPO price was cut twice within a week in the second week of November, initially to $12 a share and then again to $11 by the time the shares were listed on the NYSE 11 days ago. That's where Eros's shares are trading right now. This is equivalent to 226p per old Aim-traded share. Moreover, Eros only sold 5m new shares, raising $55m and giving the company a market value of $535m. That valuation is miles away from the $871m upper range of the IPO the company had guided investors to expect.

New York IPO debacle

The obvious and yet to be answered question is how could the board of Eros's directors and their bankers have gauged investor demand so poorly? It's not as if market conditions are harsh. In fact, the S&P 500 is trading at a record high. The other point to note is that after factoring in the IPO proceeds, and costs of the IPO, by my calculations Eros has pro-forma net debt of between $100m to $110m, so has balance sheet gearing of only 20 per cent. In other words, the board didn't have any pressing financial reason to go ahead with an IPO that was priced at a level to the detriment of minority holders of the Aim-traded shares.

Furthermore, at the current price the shares are rated on 10 times net earnings for the financial year to March 2014. That's hardly an exacting valuation compared with US content providers and the company is even more lowly rated than its peers on an enterprise value to cash profit multiple.

This then begs the question why wasn't the IPO aborted and restarted when institutional demand warranted a listing at a higher price? The obvious, albeit cynical, answer lies in the small print. That's because in connection with the proposed listing on the NYSE, Jyoti Deshpande, chief executive and managing director, entered into a new employment agreement with Eros pursuant to which she is entitled to receive a 4 per cent stake in the company's ordinary share capital on or before 20 September 2013, of which an equal percentage of shares has been locked up for one, two and three years. In addition, Ms Deshpande is entitled to receive 'A' ordinary shares of Eros valued at $2m within seven days of the shares being admitted to trading on the NYSE. In other words, there was every incentive for the company's boss to get the IPO away even if the price was slashed from $15-$17 to a miserly $11 a share.

Ultimately, we have little choice but to await for Eros to announce its third-quarter figures to the end of December, and the final results to the end of March 2014, to provide the much-needed catalyst to get the share price back to where it was trading at before the NYSE debacle of an IPO took place. I still believe that US investors will warm to the company and its game-changing joint venture with US premium network operator HBO, which significantly increases the appeal of the company's shares to US fund managers.

This landmark agreement not only brings the best of Hollywood and Bollywood together, but means that Eros is ideally placed to tap into the rapid growth forecast in the digital pay-TV (direct-to-home satellite and cable) markets in India. Driven by the growth in the middle classes, who spend far more on entertainment, analysts at KPMG predict digital pay-TV audiences in India will rocket from around 65m this year to 161m by 2016. Analysts predict that net profits from the venture could ramp up from $3m on a net subscriber base of 800,000 in the financial year to March 2014, rising to $16.5m the year after (net subscriber base of 2.2m). I will be closely looking for updated guidance on this at the time of the full-year results. If the joint venture is as successful as industry experts believe, then this should be the catalyst to drive the share price higher.

In the circumstances, I would hold onto your Eros shares and patiently wait for the next quarterly earnings announcements from the company. It's worth noting that with only 5m shares issued as part of the IPO, and a lower than normal free float, then any good news is likely to provide an accentuated upwards move in the company's share price. And since Eros is up against some easy comparatives from last year, then the odds still favour a pretty decent uplift in the company's third- and fourth-quarter earnings.

[jammy00] 23/11/2013 17:20

goodbye and would the last EROS hopeful
please turn out the lights.

[speedsgh] 21/11/2013 16:17

Well, the yanks have hardly got over-excited by the US listing so far. If Simon Thompson recommends selling in his forthcoming article (Investors Chronicle), I would not be surprised to see this fall somewhat below the IPO price.

[napoleon 14th] 17/11/2013 21:12

I have the leeway top give this until the end of the year, so I'll do that,
but it's a right ol' sham.....
Wooly Bolly!

[yorkie52] 15/11/2013 20:33

No way of getting rid of management / directors as they hold the majority vote so can do what they want.
Share price ticking up a little tonight though 11.25!! Hopefully this will steadily get rerated especially with the latest films doing well. A few more analysts will be casting an eye over it now its in the US and be compared against others of a similar ilk.

[monkeymagic3] 15/11/2013 08:34

Agreed. Rank amateurs. Goodbye.

[brownie69] 15/11/2013 08:30

The whole process has been very disappointing.

Results prior to commencing listing were poor.

Created false expectation of listing date which they failed to achieve.

Created false pricing expectation at a time when they must have know the fund raising process was going poorly.

I've lost confidence in management.

Was never sure that NYSE is the right place for this type of company, maybe Hong Kong better?

I'M OUT!

[mokhan2] 14/11/2013 23:10

Rsm117, I have an account with Halifax and it's showing the same thing. Called them today: it will take a day or two to update correctly. don't worry the value of your shares are pretty much the same as the day of delisting. And you can trade them via your cma account...