Shemaroo Entertainment Limited (Shemaroo), one of the largest independent content aggregators in Bollywood, recently announced that CARE has reaffirmed ‘CARE A- (Single A minus)’ rating to the long term bank facilities of Shemaroo. The rating has been revised from CARE BBB- (Triple B Minus) to CARE A- (Single A minus). Earlier this year, Shemaroo Entertainment was assigned A-/Stable rating by CRISIL.

Rating Rationale by CARE:

The revision in the rating assigned to bank facilities of Shemaroo Entertainment Limited (SEL) takes into account significant improvement in the capital structure of the company after raising equity through Initial Public Offer (IPO), and improved financial performance of the company in FY14 (refer to the period April 1 to March 31) and 9MFY15.

The ratings continue to derive strength from the experienced promoters, their established business relationship in the Indian film industry, well-placed market position in the broadcast syndication business along-with availability of significant content library, growing new age media business enhancing the content monetization capability and healthy growth environment of Indian film and television industry.

However, the rating strengths are tempered by the working-capital intensive nature of the operations and competitive nature of broadcast syndication business, which is also highly susceptible to the vagaries of economic cycles. SEL’s ability to scale up its operations with diversified revenue stream in a new age media business and maintain the profitability by generating healthy realizations from broadcasting rights are the key rating sensivities.