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19 Sep | Eros International

Eros, the Greek God of Love, son of Aphrodite, cousin of Cupid. The mere uttering of the word is enough to raise the mercury a mill or two in some.

In AIM investment circles, the name Eros has been known to arouse a little interest too. It belongs to a compelling small cap company based a little to the East of Greece – Mumbai in fact, home of India’s prodigious film industry, Bollywood and Eros International (EROS.L).

It’s a company we jumped in and out of back in 2009/10 for a quick-fire 61% profit. Now if that’s not love…

Eros International is a fascinating proposition with a history that runs deeper than the emotion of an Aamir Khan close-up.

Founded in 1977 with a vision of exporting Indian cinema to the world (and keen to tap into the video boom of the 70s and 80s), Eros quickly set about acquiring international intellectual property (IP) rights for a ton of Indian cinema.

Thirty five years on and Eros holds the IP rights to over 2,600 films – the aggregated rights to 1,900 and digital-only rights to a further 700 – add another 5,000 music videos to the equation and that’s a big ol’ pile of IP.

Not a company to rest on it’s back catalogue, Eros released 78 films in the year ended 31 March 2011 and backed that up with another 77 in the year ended March 31, 2011, six of which where global releases: Ra. One, Zindagi Na Milengi Dobara, Ready, Rockstar, Desi Boyz and Agent Vinod.

Although Indian custom understandably dominates the Eros market (66.3% of revenue for the financial year ended 31st March 2012 came from India) the company has a distribution network that spans 50 countries and has bases in demographically key locations such as UK, USA, Dubai, Australia, Fiji and Singapore.

Despite the bashing the Indian Rupee suffered against the US Dollar in the twelve months to 31st March 2012 – finishing the year down 13.8% – Eros still posted a 25.5% increase in revenues and a 17.0% increase in underlying operating profit for the year ended 31st March 2012.

Here’s their 12 month chart.

If I were to have a binary options bet on where the Eros share-price would be in three months time, my money’s on northwards.

But the plot thickens! There’s a proposed listing on the New York Stock Exchange in the offing which in itself has become a little bit of a Bollywood drama. On which Executive Chairman, Kishore Lulla had this to say in the company’s most recent prelims from July 2012:

Further to the Company’s latest public filing on May 2, 2012 with the United States Securities and Exchange Commission in connection with its proposed listing on the NYSE, the Company announced on 8 June, 2012 that, given the current US equity market conditions, the Company has not yet determined when to launch its intended NYSE listing. The Company is continuing to monitor the situation and, when more clarity is available on timing, the Company will make a specific announcement to the London Stock Exchange. In the meantime, Eros will remain listed on AIM, London Stock Exchange.

In order to cash in on faster broadband connections in India and the emergence of 3G and 4G mobile networks, Eros recently launched Eros Now – an on-demand entertainment portal accessible via internet-enabled devices. Today it features only a limited number of the Eros back-catalogue of movies and music videos but watch this space. If you get a chance, check out the Eros International YouTube channel. You wont be alone. It’s currently pulling in 70 million views a month which offers a glimpse of the potential numbers Eros Now has to work with moving forward.

So with a back-catalogue like theirs, the emergence of Bollywood markets outside of the Subcontinent and the possibility of a NYSE listing for Eros, the plot for Investor Trader may again take a daring shimmy to the east.

Thanks again for dropping by.

Paul
rsvp@investorsoiree.co.uk