In This Article:
Shemaroo Entertainment Limited (NSE:SHEMAROO), a ₹13.36b small-cap, operates in the media industry which has experienced the impact of the growing presence of online streaming. Media analysts are forecasting for the entire industry, a positive double-digit growth of 22.7% in the upcoming year , and a massive growth of 86.4% over the next couple of years. This rate is larger than the growth rate of the Indian stock market as a whole. Is now the right time to pick up some shares in media companies? In this article, I’ll take you through the energy sector growth expectations, and also determine whether Shemaroo Entertainment is a laggard or leader relative to its media sector peers.
See our latest analysis for Shemaroo Entertainment
What’s the catalyst for Shemaroo Entertainment’s sector growth?
Competition for customers through more content and lower pricing point has eaten into existing companies’ margins. Over the past year, the industry saw growth in the teens, though still underperforming the wider Indian stock market. Shemaroo Entertainment leads the pack with its impressive earnings growth of 18.3% over the past year. However, analysts are not expecting this industry-beating trend to continue, with future growth expected to be 20.1% compared to the wider media sector growth hovering in the twenties next year. As a future industry laggard in growth, Shemaroo Entertainment may be a cheaper stock relative to its peers.
Is Shemaroo Entertainment and the sector relatively cheap?
Media companies are typically trading at a PE of 21.83x, relatively similar to the rest of the Indian stock market PE of 19.55x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. Furthermore, the industry returned a similar 8.6% on equities compared to the market’s 9.3%, potentially illustrative of a turnaround. On the stock-level, Shemaroo Entertainment is trading at a PE ratio of 17.23x, which is relatively in-line with the average media stock. In terms of returns, Shemaroo Entertainment generated 15.2% in the past year, which is 6.6% over the media sector.
Next Steps:
If Shemaroo Entertainment has been on your watchlist for a while, now may not be the best time to enter into the stock. The company is an media industry laggard in terms of its future growth outlook, and is trading relatively in-line with its peers. If growth and mispricing are important aspects for your investment thesis, there may be better investments in the media sector. However, before you make a decision on the stock, I suggest you look at Shemaroo Entertainment’s fundamentals in order to build a holistic investment thesis.