Pyramid Saimira Theatre in spotlight

Pyramid Saimira Theatre was locked at the upper limit of 5% at Rs 25.75 on the BSE after its board approved raising up to $100 million through issue of global depositary receipts, American depositary receipts or foreign currency convertible bonds.

The announcement was made after trading hours yesterday, 26 August 2009.

Meanwhile, the BSE Sensex was up 95.41 points, or 0.61%, to 15784.28.

On BSE, 20,733 shares were traded in the counter as against an average daily volume of 1.16 lakh shares in the past one quarter.

The stock had hit a 52-week high of Rs 159.90 on 11 September 2008 and a 52-week low of Rs 13.15 on 5 March 2009.

The stock has risen 21.17% in four trading sessions from a recent low of Rs 21.25 on 20 August 2009. The stock had outperformed the market over the past one month till 25 August 2009, rising 10.34% as compared to the Sensex's 2.01% rise. It underperformed the market in past one quarter, gaining 10.14% as against 12.76% rise in the Sensex.

The small-cap cinema chain operator has an equity capital of Rs 29.76 crore. Face value per share is Rs 10.

The board also approved de-merging its distribution and production wing from the parent company

Pyramid Saimira Theatre is focused on distribution and exhibition of films. Its objective is to have presence in all categories of theatres including malls, multiplexes, cineplexes and standalones across the country in tier I, II and III locations.

The company reported a net loss of Rs 85.37 crore in Q4 March 2009, much higher than a net loss of Rs 3.11 crore in Q4 March 2008. The company's sales fell 67.1% to Rs 80.69 crore in Q4 March 2009 over Q4 March 2008.

Pyramid scamster flouts ban, sells Kotecha stocks

The perpetrators of the Pyramid Saimira scam continue to demonstrate their utter disregard for the law of the land.

In a daring act last week, a banned entity, Banty Dinesh Shah, the proprietor of Balaji Corporation (also banned), managed to hoodwink the system and offload his portfolio worth Rs 11 lakh. With Shah slipping through, the Securities and Exchange Board of India (Sebi) has now banned the brokerage Anugrah Stock & Broking Private Ltd, which executed the trade overshooting the ban.

The regulator has appointed Suresh B Menon, chief general manager, to look into the adequacy of the risk management system of the broker as well as the possibility that they worked together with Banty Dinesh Shah to violate the ban.

On May 21, Shah sold 13,500 shares of RTS Power Co and 1,000 shares of Usher
Agro in his demat account at Anugrah, netting him Rs 11,27,100.

Both these stocks were among the portfolio of Nirmal Kotecha, the mastermind behind the Pyramid Saimira scam, which included faking a Sebi order.

Shah and Balaji Corp were banned from dealing in shares for their active involvement in helping Kotecha defraud the market.

In the course of investigations, Sebi also unearthed a number of other violations.

The order banning Shah from the markets had been issued by Sebi on April 23. His account should have been closed on April 24. However, the broker had not closed it for over a fortnight. It was only after the receipt of a letter from the Bombay Stock Exchange on May 11 that the account was finally closed. But even this did not have any effect, as the client easily circumvented it when he wanted to (after the market bounce post elections).

The broker was also found guilty of violating the Know Your Client norms in case of Shah. An electricity bill submitted as proof of residence did not belong to him. Also, his office details and address have not been properly recorded. The name of the establishment has been filled as 'Diamond Broker' and his office address as just 'Opera House'.

"This defeats the very purpose of Know Your Client policy of ensuring that only legitimate and bona fide clients are accepted. Thus, the stock broker has not ensured that details in the Client Registration Application in respect of Mr Shah are adequate for a complete identification of the said client," Sebi complained.

The broker argued that the dealer who executed the trade on Shah's instructions submitted to Sebi that he was unaware of the order banning the client. The dealer stated that he was under the impression that the account could be closed due to a technical problem or on account of there being a debit balance in the account.

Shah had requested that the account be opened for the transaction as it would not add in any way to the broker's liability.

via DNA

Pyramid of fraud

The Pyramid Saimira fraud doesn’t even have the attribute of being a complicated piece of skullduggery. A large number of people, a business journalist among them, got the stock price moving in a direction they wanted by using a forged letter. However, it is the very basic nature of this piece of crooked business that makes the implications deeply worrying. Full marks to Sebi, of course, for quickly investigating the fraud and strongly punishing those involved. This is not the first time, in India or elsewhere, that a journalist has been caught reinterpreting his reporting duties in a fashion that allows a steep rise in returns on a dodgy investment. Journalists covering high-stakes finance/corporate news need a particularly persuasive set of disincentives against moral malleability. That there are not too many of this kind of journalists is no comfort when put beside the evidence against the few who violate absolutely basic journalistic principles.

Sebi’s investigation also shows the extent to which apparently okay corporate entities—Pyramid Saimira looked like a straitlaced entertainment company—can manipulate the market. Shades of Satyam? Maybe even worse. The Saimira case involved 200-plus people in different institutions. That such a large number of market players, across different functions, helped perpetrate a fraud for a company with a turnover of less than Rs 800 crore is indication of the challenge that faces Sebi. The small fish is often harder to catch than the big fish and the damage can be equally big in both cases. The promoters’ role is another issue here. In the Saimira case, one of the promoters was using a mobile phone registered in someone else’s name, that someone acting as the proxy for manipulating market volumes. This is crookedness of the grubbiest kind and it is impossible not to wonder how many promoters entertain clever ideas like this to manipulate their stock price. Sebi has turned India’s stock market into a mature institution, a far cry from the days a bunch of brokers thought the market was their private fiefdom. Both the current Sebi chief and his predecessor have made large contributions towards that outcome. We haven’t had a monster market fraud since the Ketan Parikh case. But, remember, SEC in the US looked as surprised as everyone else when the Madoff scam broke. Sebi already inspires considerable fear. The fear factor has to be ramped up considerably.

via FE Editorial

Pyramid Saimira promoters barred from market

The Securities and Exchange Board of India on Thursday barred Nirmal N Kotecha, the promoter and one of the largest stakeholders in
Pyramid Saimira Theatre from dealing in the securities market till further directions.

A release issued by the regulator said that Mr Kotecha had "masterminded" the forgery of a Sebi letter directing the promoters of PSTL to make a open offer to minority shareholders. After the forged letter appeared in the media , Mr Kotecha used the temporary spurt in the stock price to offload a substantial portion of his holding in the firm.

"Shri Nirmal N Kotecha was also found to be using a large number of front accounts including his related persons/entities to manipulate the securities market and to route the funds through several layers in order to hide the source and flow of funds, and this prima facie appears to be a money laundering activity," the release said.

The regulator also barred PS Saminathan, the CEO of PSTL, also from dealing in the stock market till further notice. "Shri PS Saminathan has prima facie made misleading public announcements, only to create public interest in the scrip of PSTL for facilitating Nirmal Kotecha in off-loading the shares of PSTL at artificially inflated price in the market," the release said.

Sebi has passed a similar order against Rakesh Sharma, an exemployee of public relations firm Adfactors, and Rajesh Unnikrishnan, an employee of The Economic Times, for having allegedly "facilitated the publication in the media of the forged letter." ET is looking into the matter. Stock broking firm Keynote Capital has been barred from giving any trade recommendations on listed companies till further notice, while two other brokerages, India Capital Markets and Dynamic

Stock Broking have been barred from entering into any fresh agreements with new clients.

via ET

Pyramid Saimira - Kotecha doesn't hold any shares

"We are getting queries from investors regarding current position of Mr. Nirmal Kotecha in the Company.

We want to clarify the investor community that as per his latest disclosure received by the company and intimated to the stock exchanges, presently Mr. Nirmal Kotecha is not holding any share in the company and he has resigned from the board of directors with effect from November 17, 2008.

Hence he is no more a person belonging to promoters group or a Person Acting in Concert."

SEBI letter forged - PSTL

Chennai-based entertainment and theater company Pyramid Saimira Theatre today said the letter which it had received from the regulator Securities Exchange Board of India (Sebi), with regard to the company's open offer, has been forged.

The company had requested the Bombay Stock Exchange and National Stock Exchange not to issue the pay out and to conduct a thorough enquiry into the company's share transaction on Monday. The company is also planning to launch a formal complaint with Central Bureau of Investigation (CBI) in this regard.

Speaking to reporters in Chennai today P S Saminathan, chairman, Pyramid Saimira Theatres said that the regulator had clarified to the company that it did not issue any letter and would issue a detailed press release later today.

Saminathan also denied all the points which has been stated in the so called letter sent by Sebi. "If the letter itself fraud, there is no point commenting on it," said Saminathan.

The letter dated December 19, 2008, which is in the circulation printed at the regulator's letterhead carrying Corporate Finance Department's Assistant General Manager signature. The letter subjected, "Violations of Sebi (SAST) Regulations by P S Saminathan & Pyramid Saimira Theatre", stated that Sebi had directed Pyramid Saimira to make an open offer to buy 20 per cent in the company at Rs 250 a share.

Meanwhile, the concerned courier company which delivered the letter to Samintahan, in written has confirmed that they received instruction from Sebi to deliver the letter on December 22. Saminathan noted, the regulator normally faxes such letters and does not courier them. He feels this is a deliberate attempt to defame the company.

He added, his current holding is 24 per cent in the company and planning to consolidated it by buying another 22 per cent from Nirmal Kotecha on Monday, which would haven taken to the total share holding of Saminathan to 46 per cent.

But on Monday company's stock surged as much as 10 per cent on the domestic bourses on reports that the promoters would make an open offer to the shareholders for acquiring a further 20 per cent stake. Shares of Pyramid Saimira surged 9.95 per cent in the opening trade to hit its upper circuit of Rs 82.90 on the BSE, which had put Saminathan's plan on hold.

Saminathan said there has been massive 75 lakh share trade and 25 lakh shares delivery marking which is completely abnormal.

The current share holding pattern of the company Saminathan – 24 per cent, Nirmal Kotecha – 22 per cent, Narayanan, 4 per cent, Other promoters – 4 per cent and Public – 46 per cent.

via Business Standard

SEBI asks Pyramid Saimira to make open offer at Rs 250

The Securities and Exchange Board of India (Sebi) has directed Pyramid Saimira chairman and managing director (CMD) PS Saminathan to make an open offer to acquire additional 20% shares of the company at a price of not less than Rs 250. According to Sebi, Mr Saminathan crossed the creeping acquisition limits by acquiring companys shares in the period between June and December 2008.

Shareholders of the company would definitely rejoice, as the stock is currently trading at Rs 75.40, much below the proposed open offer price. Interestingly, it appears that a section of market players had an inkling of such a development, as the stock price has already doubled since the start of the current month. The stock that closed at Rs 75.40 on Friday was trading around Rs 38 on December 1.

Sebi, in its order dated December 19, noted that Mr Saminathan acquired 4.89% shares during June 2008 at Rs 250 per share and again in the period between November 19 and December 5, 2008, he acquired 6.91 lakh shares from the market. By making these market purchases, it is clearly observed that you have crossed the creeping acquisition limits and triggered public announcement for open offer, says the Sebi order.

The market regulator has ordered Mr Saminathan to file prospectus for public announcement for open offer and acquiring further 20% of the shareholding within 14 days at Rs 250 per share. In its order, Sebi has also questioned

Mr Saminathan about reports (in October 2008) that he intended to acquire a further 25% stake in the company from other two promoters NC Ravichandran and Nirmal Kotecha for around Rs 150 crore at Rs 200 per share, when the market price was only Rs 60.

Pyramid Saimira Theatre

Pyramid Saimira Theatre

Nirmal Kotecha sells PSTL

Pyramid Saimira Theatre Ltd said its chairman, P.S. Saminathan, bought on Friday 1.37 million shares, or about 4.8 percent, in the company from Nirmal Kotecha, part of the founders' group.

Earlier in the day, a block deal of about 4.9 percent took place at 250 rupees per share on the BSE.

Shares in the cinema chain operator closed down 19.58 percent at 216.40 rupees

via Reuters

Pyramid Saimira ties up with Spize TV

Pyramid Saimira Entertainment, a subsidiary of Pyramid Saimira Theatre, has tied up with the UK-based Spize TV, a direct-to-home (DTH) platform to offer the complete suite of the ARY Network channels (ARY Digital, ARY One World, QTV, and The Musik) and also the two B4U Network channels (B4U Movies & B4U Music) in the UK.

Pyramid Saimira Entertainment will provide content on Spize TV, a pan-European direct-to-home (DTH) TV platform offering Asian and niche content to viewers in Europe.

While Spize TV’s North bouquet has have channels in Urdu, Hindi, Punjabi, Bangla and Gujarati. The South bouquet has channels in Tamil, Telugu, Malayalam, Kannada, and Sinhalese. Since the soft launch of the bouquet, the channels are available, and the formal commercial launch for viewers will be in April 2008.

SpizeTV is a pan-European direct-to-home TV platform offering Asian and niche content to viewers in Europe. Spize TV is available on the EuroBird-9 (EB9) satellite, which allows viewers to benefit from the 500+ free-to-air channels on the HotBird satellite. Ajoy Khandheria, CEO of SpizeTV (Managing Director, ORG Informatics Ltd.) says “SpizeTV is a very exciting project for our Group to offer niche content on a pan-European basis and are proud to work with Eutelsat to create the EB-9 as a new hot location for the region, and with Pyramid Saimira to capitalize on their extensive content expertise.”

Salman Iqbal, MD of ARY Group says “we are proud to be the anchor tenant on the SpizeTV platform to progress the European distribution of ARY.”

Via ET

Aar ya Paar - Adlabs v PSTL

While the RPL v RNRL game is going on well ...

Here is a new one .. PSTL v Adlabs

Adlabs - CMP - 1564.95

PSTL - CMP - 452.00

Let us know your position, why one stock will outperform the other :) ( by Jan 18 2008)

Blue Star, Ruchi Soya, Simplex Infra, Kalyani Steel, Pyramid Saimira

Blue Star
CMP: Rs 535
Target price: Rs 593
Kotak Securities has a ‘buy’ rating on the central air-conditioning systems major Blue Star, as it feels it will report handsome earnings growth over the next two years (CAGR of 78% between FY07 and FY09). The company being in a position to offer the best requirement for central as well as commercial refrigeration equipment enabling it to maintain a leading market position in this segment, remains one of the key reasons for its bullishness.

The brokerage also feels that the stock is a play on structural themes like IT/ITeS and retail. However, the brokerage warns that appreciation in the rupee and slowdown in IT/ITeS services remain key concerns. Kotak calculates that at the current price, BSL is trading at 25.1x and 19.3 times FY08 and FY09 earnings, respectively, and on a forward EV/EBITDA basis, the stock is trading 12.6 times.

Ruchi Soya
CMP: Rs 144
Target price: Rs 193
KR Choksey Securities has reiterated its ‘strong buy’ recommendation on Ruchi Soya Industries (RSIL) and revised upwards its estimates and target price. “We strongly believe RSIL is grossly undervalued considering the various growth drivers of its existing business and new ventures,” the brokerage said in a note to its clients. It says that its belief in the growth prospects of the company is substantiated by the fact that the management of RSIL is increasing its stake in the company by way of a preferential allotment.

It estimates that India has one of the lowest per capita consumption of oil in the world, but rising income levels, emanating from general economic growth, is leading to an increase in consumption which should augur well for the company. Taking into consideration the consistently high growth in branded revenues, sustainable revenue
visibility and improvement in profitability, the brokerage believes RSIL deserves the valuation of an FMCG company.

Simplex Infra
CMP: Rs 692
Target price: Rs 754
Ambit Capital has a ‘buy’ rating on Simplex Infra on the basis that the company’s two recent equity issues would lead to an increased net worth and reduced financial leverage. “The risk of high debt-to-equity would now take a back seat, as it would come down from 2.5 times in FY07 to 0.7 times in FY08E.

The reduction in financial leverage would lead to a reduction in the extremely high interest payments and thus increasing earnings for the company on a net level,” the brokerage feels. Considering the robust order book position (of Rs 8,100 crore), improved debt-to-equity levels and improved working capital position, Ambit has remodeled its numbers for FY08E and FY09E, with an increase of 10.8% and 22.8% in net earnings for two years.

Kalyani Steels
CMP: Rs 499
Target price: Rs 771
Prime Broking says ‘it’s a no-brainer’ to figure out that the Pune-based company is a strong ‘buy’, based on the company’s expected growth in its core business and highly attractive valuations. The brokerage estimates that the company plans to expand its capacity at Hospet by 75% to 0.3m metric tonnes in FY08 at an outlay of Rs 300 crore, implying a 28% volume CAGR(compounded annual growth rate).

It says that KSL directly and through its 100% subsidiaries has substantial investments in group companies — Bharat Forge, Bharat Utilities and Hikal. At current market prices, the value of the KSL’s investment portfolio works out to Rs 633 per share, which is around 20% higher than the company’s current stock price. “Applying a holding discount of 30%, we have arrived at an investment value of Rs 443 per share,” the brokerage said.

Pyramid Saimira
CMP: Rs Rs 484
Target price: Rs 630
India Infoline says that investors should ‘buy’ the stock on declines as it could be a good long-term bet. The brokerage says that the com-pany, engaged in distribution and exhibition of films, plans to enter into movie making business with plans to make 40 movies in five lan-guages by FY09.

“We expect the subsidiaries of PSTL, Pyramid Saimira Production and Singapore-based Pyramid Saimira Entertainment to witness huge growth in coming quarters,” India Infoline said. The company’s capex plans also include development of 200 malls and 175 multiplex with around 2,000 screens by FY10. Recently, PSTL acquired Texas-based FunAsia an existing theatre and radio network in Chicago and Houston

Pyramid Saimira Theatre

Pyramid Saimira Theatre

Pyramid Saimira

Pyramid Saimira Theatre Ltd. is the largest theatre chain company in India. We initiate coverage with a Buy and a 15-month price target of Rs1074.

Highlights

Largest theatre chain

The Pyramid Saimira Group currently owns the largest chain of cinema theatres in Asia through group flagship Pyramid Saimira Theatre Ltd. (PSTL). PSTL is set to become the world's largest theatre chain company soon. Its geographical footprint spans across India, SE Asia (Singapore and Malaysia) and the US. Its interests include film and television content production, film distribution and exhibition. Its well-experienced and aggressive management and unique business model are its major strengths. The group enjoys a tremendous early mover advantage in the film exhibition space.

Innovative business models of both PSTL and the group

PSTL's innovative business model involves benefit of scale, increased negotiation power with producers, distributors and theatre owners and scalability. PSTL focuses on leasing properties only after thorough due diligence and market research. Growth and success of the PSTL group is attributable to the uniqueness of its business model, wherein content distribution is closely linked with exhibition strengths and constitutes a strong entry barrier. Further, the strategy of content exclusivity leads to high occupancy rates, contributing to profitability in a big way.

Spanning the entire value chain from content production to distribution…

Its production arm, Pyramid Saimira Productions Ltd. (PSPL) plans to produce 50 films in a year in all Indian languages, going forward. Its content distribution arm Pyramid Saimira Entertainment Ltd. (PSEL) distributes films in various Indian languages as a content agglomerator in India as well as in overseas markets. Apart from these above, it has other entities for exploiting technology & technology advancements, advertisements, realty and post production & visual effects.

…to exhibition

In the film exhibition sector, PSTL is already the largest domestic theatre chain and also plans to have a global footprint. Currently it has operations in Malaysia and the US through subsidiaries .

Foray into theatre advertising

PSTL recently acquired 51% stake in Mumbai based Dimples Cine Advertising Pvt. Ltd. (Dimples). Through this acquisition PSTL will roll out a massive business plan for Dimples, thus it will have access to 4000 digital screens by FY10. With the stake acquisition in Dimples, PSTL will foray in theatre advertising, out-of-home advertising, etc.

Interests in related businessess through subsidiaries & JVs

PSTL has interests in related businesses of production and distribution, through subsidiary companies and joint ventures. Each of these will meet financial closure independently through issue of equity and / or debt.

Potential for value unlocking through subsidiaries

We believe there is potential for tremendous unlocking value in the subsidiary companies, viz., PSPL and PSEL. We note that Eros International , also a leading film distribution company, which listed on the LSE Alternative Investment Market (AIM) in the UK last year, trades at 29.7x FY08 earnings. We believe PSEL, if listed, can get a similar if not better valuation by virtue of its strong promoter background and track record.

Growth story to unfold…

On a standalone basis, topline and bottomline grew by 62.4% and 131.7% respectively in H1-FY08, over FY07. We expect sales and earnings growth at CAGR of 53.8% and 58.3% respectively over FY08-10.

Valuation

The stock trades at 9.9x FY08E and 5.2x FY09E earnings respectively, which is quite attractive vis-à-vis peers Adlabs Films ( 55.2x FY09E), Inox Leisure (24.2x FY09E), Shringar Cinemas (19.7x FY09E), and Cinemax India (10.9x FY09E). In view of its plans of a global footprint going forward, we would benchmark PSTL vis-à-vis US peers Regal Entertainment Group and Cinemark USA, which trade at 21.5x and and 21.1x Dec-2008 earnings respectively.

Pyramid Saimira - acquisition

Dimples Cine Advertising is a good acquisition for Pyramid Saimira

Dimples Cine controls a major chunk of ad agency market

Market News - Pyramid Saimira

Pyramid Saimira may acquire theatre chains

Likely to be announced on Sep 24 2007

Bartronics, Global Vectra, Pyramid Saimira, Sterlite Opticals

Bartronics, Global Vectra, Pyramid Saimira, Sterlite Opticals

Pyramid Saimira sees 250 mln profit from 'Sivaji'

Cinema chain operator Pyramid Saimira Theatre Ltd. expects about 250 million rupees in cash profit from the first-month screening of the much-awaited Tamil film 'Sivaji' in India, a top official said.

The Tamil language movie, which opened on Friday, stars southern Indian superstar Rajnikanth, 57, and comes with a dubbed version in Telugu language.

Pyramid is distributing the movie in southern India and Malaysia, besides exhibiting it across 678,000 seats a day, Managing Director P.S. Saminathan told Reuters over the phone.

"Going by the response of the audience and the advanced booking, this might run for 100 days also," he said earlier on television.

Saminathan said he expected a revenue of 500 million rupees from screening the movie in India and another 150 million rupees from Malaysia, where it has been booked for three weeks.

The company has invested about 260 million rupees into this film.

Way2Wealth - Pyramid Saimira Theatre IPO

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Pyramid Saimira Theatre

Pyramid Saimira Theatre (PSTL), promoted by V Natarajan, P S Saminathan and N Narayanan, has produced 10 films since inception. It has since taken a strategic decision to concentrate on film distribution and exhibition. The company set up its first theatre in September 2005 and thereafter embarked on the mega-digital-theatre-chain project in November 2005. Till filing the prospectus, PSTL had tied up with 148 screens with 90,906 seats in existing theatres in Tamil Nadu, Andhra Pradesh and Karnataka. The company’s project is the first of its kind in the world.

The objective of PSTL is to have presence in all categories of theatres including malls, multiplexes, cineplexes and standalones across the country in Tier I, II and III locations through long-term leases, improvement in their infrastructure and conversion into digital theatres. The company is establishing an integrated network-operating center to convert films into digital formats. Digital theatres will also function as the delivery medium for other entertainment content and educational centres.

PSTL has tied up with Spirit Global Constructions Pvt. Ltd. for managing the operations of 60 malls in Punjab and Himachal Pradesh. It has a walk-in agreement with Swatantra Land and Finance to manage the operations of 22 malls in Haryana and 20 malls in Rajasthan. The malls will be fully complete with all facilities such as multi screens, food courts, entertainment zones, retail space, and parking space.

Strengths

• PSTL’s strategy of digital distribution of films in a large number of theaters simultaneously as well as improving the film viewing experience will help it to get maximum revenues from the first week of release of new film. Shelf life of films has reduced significantly and showing new films every week/fortnight is the key to success in distribution and exhibition.
• The business model is an asset-light model. PSTL has signed a pay-per-view contract with Value Media Pvt. Ltd. for 1,000 theatres for equipment and services for the digital cinema system thereby avoiding a capital expenditure of Rs 160 crore. Also, all the standalone theatres, malls, multiplexes and cineplexes are on long-term lease or revenue sharing model, further lightening the capex burden.
• PSTL has the first-mover advantage in digitisation of theatres and digitisation of films. The company will exhibit films and other content in digital mode without physical prints. This will the company Rs 60,000 – Rs 70,000 per movie per theatre and approximately Rs 20 lakh per theatre per annum.

Weaknesses

• Since June 2006, promoters have bought and sold substantial number of shares at various prices. Pre-issue, investment advisor Nirmal Kotecha’s equity stake at 41.92% is higher than promoters’ stake of 27.34% (which will go down to 22% post-IPO). This is quite low.
• PSTL is exhibiting films only for about a year. The company plans to scale up in a very big way in a short span of time. It has plans to cover 1,550 locations and manage 2,000 theatres by 2010. Negotiating, handling and managing a large number of small theater owners spread all over India will be a highly demanding job.
• PSTL is a new player in the exhibition/distribution industry and competes with other established players, some of whom have been operating for a very long time and also have deeper pockets as compared with PSTL. Its capability in Hindi film distribution is unproven. In digital distribution, the company may have to contend with the Anil Dhirubhai Ambani group, which is planning to enter the field using Reliance Communications’ optic fiber network. Also, increase in the price of content on account of competition may restrict profit.

Valuation

At the price band of Rs 88 - Rs 100, the annualised EPS for the half-year ended September 2006 on post-issue equity works out to Rs 3.3 - Rs 3.5 and PE works out to 26.4 – 28.6. TTM PE of Entertainment/Electronic Media Software is 39.7. Companies in similar business such as Adlabs Films has a PE of 36.4, and Inox Leisure 44.9. However, the business model of PSTL is different from its competitors. The company’s project is exciting and can produce fast growth at a lower capital cost (which is what stock market fancies), provided it gets executed as planned. The job will be highly demanding.