Q3FY21 Result Update - Zee Entertainment - ICICI Direct

Zee Entertainment reported a good set of Q3FY21 numbers with growth in ad and subscription revenue. Revenues grew sharply by 33.2% YoY to Rs. 2729.4 crore owing to content syndication deal of Rs. 551.2 crore. Domestic ad increased 7.5% YoY to Rs. 1244.3 crore during the festive quarter while on comparable basis, domestic subscription grew 9.3% YoY driven by both TV business and Zee5. Reported EBITDA came in at Rs. 715.7 crore, up 26.5% YoY with margins at 26.2% YoY. Consequently, reported PAT jumped 14.4% YoY Rs. 399.9 crore.

Valuation & Outlook

While Zee has gained viewership in Hindi, Kerala and Bangla, it has lost leadership position in Marathi market. Pick up in Marathi market and overall viewership is important considering the recent expansion in channel portfolio. Potential implementation of NTO 2.0 and impact on subscription revenues ahead also remains unknown. Zee's proposed heavy investment in movie business (traditionally volatile profitability compared to broadcasting) may impact operating margins. We would await finer details (likely by Q4 end) before turning constructive. We roll over valuations to FY23E and maintain HOLD rating with a target price of Rs. 250/share (vs. earlier TP: Rs. 195). We value the stock at 13x FY23E P/E (vs. 11x FY22E P/E earlier) with increase in target multiple due to faster ad recovery and earnings growth prospects on benign base, going ahead.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_ZeeEnt_Q3FY21.pdf

Shares of ZEE ENTERTAINMENT ENTERPRISES LTD. was last trading in BSE at Rs.215.3 as compared to the previous close of Rs. 249.4. The total number of shares traded during the day was 3551302 in over 34154 trades.

The stock hit an intraday high of Rs. 252.7 and intraday low of 212. The net turnover during the day was Rs. 791190435.

Source : Equity Bulls

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