 "Eros International Media falls 19%, mimics parent woes")
Wells Fargo had cut the stock rating to 'market perform' in a Friday report. The US-listed firm distributes Indian-made films and has had a string of successes, including Bajrangi Bhaijaan.
Wells Fargo analyst Eric Katz had said the downgrade was driven by a continued increase in receivables in the United Arab Emirates business, concerns on whether Eros would turn free-cash-flow positive, and worries about Eros Now. The latter is a streaming service that allows users to watch content online. (Free cash flow positive: A positive value would indicate the firm has cash left after expenses.)
Katz said Eros Now ranked lower than rivals such as Saavn in India.
Shares of Eros International, the US-listed firm, fell 20 per cent on Friday, soon after Wells Fargo released its report. It touched $14.6 a unit at the close of the trading session on Friday. Eros International Media told the BSE on Monday that share volatility in the US and India was based on speculative reports.
"We would like to re-assure our shareholders there has been no material change to the previously announced strong fundamentals of the company," the firm said.
Research house PhillipCapital said Wells Fargo's concerns were not new.
PhillipCapital said, "The management's explanation was that one of the US-listed firm's subsidiaries was in Dubai, and the US-listed firm recorded revenue there for tax purposes."
"Eros International Media is the only listed player in the Indian media space that controls content, distribution, and exploitation, across all formats globally," PhillipCapital added.
It said the drop in the stock price was a good time for investors to buy shares.
