ErOs nOw is a gOOd sTOck OpTiOn
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.
Businessman Pankaj Bansal is losing sleep. He says that any nuclear deal under which global powers lift sanctions against Iran could wipe him out. “I have been forced to take sleeping pills now to avoid nightmares as my business with Iran has drastically come down,” said Bansal, 43, from his base in a teeming commercial district of South Delhi.
Bansal’s trading firm, TMA International, has expanded from metals into motors, auto parts and chemicals as rivals were shut out of Iran by Western sanctions aimed at forcing Tehran into a nuclear compromise. He is one of thousands of exporters who enjoyed a threeyear run because India did not back the sanctions. In that time, India’s exports to Iran doubled to $5 billion, helping to halve its bilateral trade deficit. Now, they could be forced aside by European and US competitors just as Asia’s third-largest economy reels from a 20% export slump prompted by a global slowdown in trade.
The revival of India’s historic friendship with Iran, shared with Russia and Venezuela, does hold the promise of long-term trade gains. Yet short-term pain looms for oil buyers and banks that benefited from sanctions-related payment delays. A delegation of Indian exporters met Finance Min- ister Arun Jaitley last week to lobby for support to help them cope with a revival of competition for the Iranian market.
“The lifting of Western sanctions on Iran would have an adverse impact, particularly on non- agricultural commodities,” said S.C. Ralhan, president of the Federation of Indian Export Organisations (FIEO).
Yet millions of farmers too would face a hit from the easing of sanctions on Iran, a buyer of basmati rice, soymeal, sugar, barley and meat. Under sanctions, Iran paid a premium of up to 20% over global prices to buy from India.
“Iran is shifting to other suppliers like South American countries. They are supplying at much lower prices compared to India. We cannot compete,” said B.V. Mehta, executive director at the Solvent Extractors’ Association of India. Indian exporters say firms from Germany, Italy and France that once dominated in Iran will be back selling consumer products ranging from clothing to cars, and pitching for big-ticket contracts like the delayed Tehran metro.
“Traditionally, Iranians have a liking for European products. With the weakening of the euro, it will not be easy for us to compete,” said Rafeeq Ahmed, a Chennaibased exporter who used to head the Indian export federation.
The oil ministry fears that Iran could award the right to develop the giant Farzad B gas field to Europeans, who can deploy the latest technology and commit bil- lions of dollars to modernising the OPEC member state’s oil-and-gas infrastructure.
“So far they have not said ‘no’ to granting development rights of Farzad B field to ONGC,” said an oil ministry official, referring to the Oil and Natural Gas Corp. “But there is no ‘yes’ also.”
Refiners in India, the world’s No.4 oil consumer and Iran’s top client after China, want Iran to sweeten terms on crude deals to boost imports, which fell by 23% over January-June.
With the fall in crude oil prices and decline in vol- Trade ministry officials say that the economic boost to Iran from the lifting of sanctions could offer opportunities for Indian pharmaceutical, IT and commodity firms.
In May, for example, the two countries signed a deal to develop the Iranian port of Chabahar, on the Gulf of Oman, that would open up a new trade route to Central Asia.
“We may lose some engineering exports, but new opportunities could come up for products currently covered under sanctions,” said an official. Some officials favour extending soft loans to exporters and lobbying for infrastructure deals.
That will be no substitute for beating the competition, said Rumel Dahiya, head of the Institute for Defence studies and Analyses in New Delhi: “Nobody can hope for a business deal on concessional terms,” he said.