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Dolat Capital
Shemaroo Ent (Buy)
CMP: ₹281
Target: ₹460
Shemaroo Entertainment (SHEM), a media content aggregator, acquires movie/general content and monetises the same over various platforms. The emergence of 4G services over the next few months in India will be a significant step for the telecom sector and consumers. We believe this will lead to emergence of demand for data/value-added services, led by affordable smartphone penetration and network capability. While it is debatable which telecom service providers will survive in the long run and how pricing will play out post-launch of Reliance Jio, we believe content aggregators will be the ultimate winners given their operator-neutral model and ability to monetise inventory.
The traditional media segment contributes 88 per cent of revenue as on FY15. We believe that the traditional segment is poised to grow at 13 per cent revenue CAGR (CY14-17E) in line with industry growth rates. SHEM provides its content to some of the largest media houses in the country, such as Star, ZEE and Viacom 18, which have reported double digit revenue CAGR over the last three years led by healthy advertisement revenue growth.
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