Zee Entertainment Enterprises Ltd - Result Update - REDUCE - TP Rs.526 - Kotak

Zee Entertainment's operational results have come in modestly below our estimates (EBITDA lower 4%). While the company's revenues have come in below estimates, the company's advertising revenues have beaten industry growth. Reported PAT benefited from notional gains/ exceptional items. The management's commentary on expectations in industry advertising revenue growth is positive. While we continue to be cautious on the company's prospects when the tariff order is implemented (despite management's confidence on FY18 guidance of mid-teen growth in domestic subscription revenues), the improved viewership of the company's flagship Hindi GEC provides reason for greater confidence in the company's medium-term earnings. Longer-term, we view the company's aggressive content acquisition strategy as a neutralizing factor to content-mediocrity that we fear, following sale of the sports business, and in view of TRAI's tariff order. Near-term earnings are likely to be contained by investments in content, brand-building. We raise our target valuation multiple on ZEEL to 26X FY19E PER (earlier 25X FY19E PER). While retaining a negative stance on the stock, we upgrade the stock a notch to REDUCE (SELL earlier).

Shares of ZEE ENTERTAINMENT ENTERPRISES LTD. was last trading in BSE at Rs.541.7 as compared to the previous close of Rs. 530.7. The total number of shares traded during the day was 73449 in over 1143 trades.

The stock hit an intraday high of Rs. 544.5 and intraday low of 531.55. The net turnover during the day was Rs. 39683093.

Source : Equity Bulls

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