Eros International Media shares in focus post Sebi crackdown; key details

Shares of Eros International Media Ltd are in focus today after market regulator Securities and Exchange Board of India (Sebi) barred Eros International Media CEO Pradeep Kumar Dwivedi from the securities market until further notice for allegedly breaching trade practice regulations. Sebi has also barred Vice Chairman and Managing Director Sunil Arjan Lulla from holding any directorial position in any listed company, including Eros International. 

On Thursday, Eros International Media shares ended 1.42% lower at Rs 26.34 against the previous close of Rs 26.72. The company informed the exchanges about the Sebi order after market hours. Market cap of the firm fell to Rs 252.64 crore. Eros International shares opened lower at Rs 25.71 on BSE. Total 0.15 lakh shares changed hands amounting to a turnover of Rs 3.97 crore on BSE.    

The media stock has gained 17.51% in one year and lost 9% since the beginning of this year.    

In terms of technicals, the relative strength index (RSI) of Eros International stands at 54.5, indicating the stock is neither trading in overbought nor in oversold zone. The stock has a one-year beta of 0.3, indicating low volatility during the period.  Eros International stock is trading higher than the 20 day, 50 day, 100 day but lower than 5 day, 10 day, 200 day moving averages.    

The stock is likely to fall today post the Sebi order on the media firm.  

The market regulator has restrained company’s CEO Pradeep Kumar Dwivedi from holding any directorial position in any listed company other than Eros International. "Noticees 1 to 5 are restrained from buying, selling or dealing in securities, either directly or indirectly, in any manner whatsoever until further orders," the regulator said in its interim order. 

In the financial earnings disclosed by Eros for FY 2019-20, impairment provided by the company on 'Content  Advances' and 'Film  Rights' amounted to Rs 1,553.52 crore.  In the same year, Eros also wrote off trade receivables amounting to Rs 519.98  crore. Pursuant to this disclosure, National Stock Exchange (NSE) examined the financial statements of the company and forwarded a preliminary examination report to Sebi. 

It was noted in the report that revenue from operations, trade receivables, and loans given by Eros mainly comprised related party transactions, and the same had increased substantially in FY 2019-20. The preliminary report observed that prima-facie these transactions indicated that the company was engaging in financial misreporting/siphoning/diversion of funds. 

The company said, “We are in the process of seeking legal advice in the matter and taking appropriate actions, as may be advised.” 

Eros was incorporated on August 19, 1994, with an objective to carry on the business of exhibiting, distributing and otherwise exploiting cinematograph and television films and motion pictures of all kinds, including commercial advertisement films. Eros came out with an initial public offering in 2010, where it raised close to Rs. 350 Cr, and was listed on BSE Ltd. (“BSE”) and NSE.  

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