There have been recent reports in the media that Eros International Media Ltd, a company listed on the Indian bourses, is in advanced talks to sell a 10% stake in the Eros Now unit to Singapore based Fullerton Fund Management Company. Eros Now is a streaming platform and a paid subscription service channel. It has more than 19 million Indian customers and is betting on changing its monetisation strategy to rely more on digital advertising. This way the foreign companies can advertise on their platform and attract growing number of affluent Indian users for their products. Increasing use of smart phones by Indian subscribers can also dramatically boost revenue and profit for the company. Eros International Media is currently valued at over USD 1.3 billion and in case this stake sale goes through in the next few months, the valuation of Eros Now could go up substantially. Incidentally, the parent organisation Eros International Inc is the owner of Eros Now as per clarification by the management. Singapore Sovereign Wealth fund, Temasek Holdings Pte already owns a 4.5% stake in Eros Media while its subsidiary, Fullerton holds about 10% in it. If the deal takes place, it will unlock an opportunity to monetise the valuable platform created by Eros over the next few years. With a rich content library, the company maybe able to further strengthen its platform and push past Netflix Inc in terms of number of users worldwide. Furthermore, the monetised value of the portal can fulfil Eros's working capital requirement resulting in lower interest and finance outgo. The company also has global distribution rights for a few mega movies to hit the silver screen soon and there are expectations of bumper collection targets. The Eros International Media stock currently quoting at Rs 505 on the Indian stock exchanges can lead to a significant upward revision for a target price of Rs 825 in the next one year.
The NSE 50 and the BSE 30 indices opened on Friday last on a positive note but remained flat till the end of the day. Since there were no major triggers, the benchmark indices moved in a narrow band but closed in the positive territory with the Sensex up by 87 points at 27,661 and the Nifty ended 32 points higher at 8,360. Most of the sectoral indices were higher but trading with marginal gains. Technically, analysts predict that on the daily chart 8,280 Nifty level is a crucial support going forward and if this level is breached then correction can take it to 8,200. On the upside, 8,410 Nifty level is a strong resistance zone for the index. Right now, it seems the bears are in control and the Nifty may touch the 8,200 levels in the near future.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.