Zee Entertainment Enterprises Ltd. share price target

Value Creating Digital Play poised for Scale-Up Price potential yet to be realized While the merger with Sony has the potential to transform the company into a Media Titan, a key overhang with respect to its single largest investor- Invesco is now behind after it gave the green signal to the merged entity as being value accretive to shareholders. With a...

After growing network and revenue market share consistently for a long period, Zee lost share in the last few years due to the promoter pledge and corporate governance issues. However, the recent merger with Sony has the potential to transform the company into a media powerhouse. The deal with Sony would enable a) a strong dominance in the Broadcasting space and b) the capability to be a force in the Digital Media space. With a warchest of INR113b (capital infusion from Sony post-merger) and a steady annual EBITDA generation capability of ~INR50b (from linear biz), the combined entity could certainly...

In the short term there is risk associated with corona virus cases, however given its large portfolio, strong pipeline, synergies from the merger, and significant growth in the digital platform business, we...

Optical fall in top-line due to high base: Revenues declined 22.6% YoY to Rs21,126mn (PLe Rs22,459mn) due to base effect (there was one-time syndication revenue of Rs5,512mn in 3QFY21). Excluding syndication income, revenues declined 3.0% YoY. Domestic ad-revenues declined 3.1% YoY to Rs12,061mn...

ZEE posted a weak 3Q earnings, with a network market share loss of 40bp, leading to a 3% YoY revenue decline, 5% below our estimate (adjusted for a one-off in 2QFY22). Adjusted EBITDA/PAT declined by...

ZEE announced completion of the due diligence and final contours of the deal. SONY and ZEE's promoters will hold 51%/4% in the merged entity, while the rest will be held by the public. There will be a fresh capital infusion of INR113b (USD1.6b) by Sony, including the INR11b as non-compete fee to ZEE's promoters, which will be utilized to increase its stake to 4% from 2% in the merged entity. The merged entity is valued ~17x FY20 EV/EBITDA and 22x P/E. On a SoTP basis, the merged entity's linear business is estimated to be valued at 11-12x...