Shares of Eros International have been on the rise, thanks to a strong show by the stock on the US bourse. From a low of $5.59 on February 17, the Eros International Plc shares surged to a high of $9.54 on the NYSE, posting a sharp rise of 70 per cent.
This has reflected in the domestic market too, but with belated traction. The stock on Thursday closed at ₹166.3, from a low of ₹125.75 registered on February 29.
Revival modeThe stock in the US markets has been gaining even after it reported rather ‘disappointing’ results.
But analysts tracking the sector said the stock has been on a revival mode, following a sharp fall in recent times, due to adverse news such as Wells Fargo & Co analysts raising questions about the company's growing business in the UAE and weak results.
From a high of $39.01 in August last year, Eros Plc crashed to a low of $5.59.
Macquarie, which maintained its outperforming rating said Eros has reported disappointing third quarter results as it has foregone some revenue to focus on reducing receivables in the near term. “However, Eros is setting up for a very solid fiscal 2017 earnings story on a likely strong box office and Eros Now monetisation. Separately, we look forward to Skadden Arps’ audit due in March,” said Macquire, lowering its price target on Eros to $20 from earlier $25.
Jefferies, which reduced the price target to $14 from $21 but recommended a ‘buy’, said while Eros continued to deliver at the box office, the management’s decision to forgo catalogue revenue in the third quarter had an adverse EBITDA impact as these are high-margin dollars. Despite the management’s new guidance for Eros, investors are concerned with the core business and accounting treatment of catalogue revenue, it added.