Why Eros International slumped 20% in trade today

Shares of Eros International Media nosedived nearly 20 per cent in trade on Monday on news report that the company's US-listed parent firm Eros' stock rating has been downgraded by the Wall Street bank Wells Fargo.  

Analysts raised red flags over company's revenues that it generated from UAE. They also raised questions on the company's receivables and user count of its streaming service ErosNow.

The stock ended 19.11 per cent down after hitting an intraday low of Rs 352.10, down 19.63 per cent, on the Bombay Stock Exchange (BSE). The US-listed Eros lost 17% on Friday after stock downgrade.   

Eros held a conference call with analysts in the US on Friday to counter allegations on Twitter about its growing revenues from the UAE, reported Economic Times.

"Management broke down the receivables in a very detailed manner, but quite frankly it was still difficult for the analysts on the call to fully grasp the collection cycle and movement of funds (particularly deals booked in the UAE)," said Wells Fargo, in a report released on Friday, as reported by Economic Times, downgrading its rating on the stock to 'market perform'.

Stock Exchange has sought clarification from Eros International with reference to the same news report. Reply from the company is awaited.