Zee Entertainment Enterprises Ltd. share price target

Guidance for working capital improvement, improved governance, better disclosures is a positive change. Nonetheless, near term concerns such as ad outlook as well as potential implementation of NTO 2 remain. We will turn buyers once ad recovery, improved cash flows & overdue recovery from related parties (walking the talk) is seen. We do, however, increase our target multiple from 9x FY22 P/E to 11x FY22 P/E with a revised target price...

Zee Entertainment Enterprises Ltd.s quarterly profit reported below estimates as ZEEL declines on reporting Q4 net loss of Rs 766 cr Consolidated net sales fell 3.4% to Rs 1,951.08 crore in Q4 March 2020 compared with Rs 2,019.27 crore in Q4 March 2019. Pre-tax loss was at Rs 803.03 crore in Q4 March 2020 as against Rs 441.91 crore in Q4 March 2019. Current tax dropped 53.4% to Rs 70.65 crore in Q4...

Q4FY20 consolidated revenue fell 3.4% YoY due to decline in revenues from Advertising (-14.7% YoY) and other sales and services (-27.8% YoY). However, the overall drop in revenue was partially offset by...

The Zee stock has been an underperformer recently, falling ~40% in the last four months due to cash-flows and balance-sheet concerns. We believe management's focus on cash-flow and cleaning the balance sheet is positive. At the ruling market price, the risk-reward is favourable. We maintain our Buy rating with new target price of `220. Revenues were largely inline, operating profit impacted due to one-offs. The sharp drop in ad revenue pulled down Zee's revenue 3.4% y/y to `19.51bn in Q4FY20. Domestic ad revenue slid 15.1% y/y. On the new tariff...

Zee's Q4FY20 was weak with 15% YoY decline in ad revenues, multiyear low EBITDA margin of 16% (reported negative) in a quarter that wasn't impacted by Covid, Rs 11bn write-offs, Rs 10.5bn rise in inventory in H2FY20 (Rs 15bn in FY20) and auditors' qualification for liabilities not provided for worth Rs 4bn. MD & CEO open letter' as usual is upbeat (has to be) stating rebirth of company (Zee 4.0), 5Gs (governance, granularity, growth, goodwill, and gusto) etc is good to hear. But as is the saying actions speak louder than words'; we would prefer tangible results (FCF followed by...

Ad in FY21 to be washout; stable subscription a solace Zee expects the mix of macroeconomic challenges, Covid-19 shock to impact sharply with about two-third of ad revenues loss in Q1, worst case ad revenue fall of 28-30% in FY21. It expects some recovery by Q2 end aided by festive season beginning and complete availability of new programming (currently operating at ~60-70% in Hindi, ~80-90% in regionals (ex-Tamil)). We bake in ~20% decline in ad revenues, followed by ~25% growth in FY22, on a depressed base. On the subscription front, given the impact of...

Although the investment in SugarBox pushes Zee's digital reach, we believe it is ill-timed considering it is not in the company's core operations and given the already existing cash flow woes. Also, the break-even period is longer. Hence, we remain cautious on the SugarBox investment by Zee Entertainment. Zee's inventory and related party receivables remain high....

Bracing for washout FY21 but FY22 may be bumper Ad revenues to be hit hard by Covid-19 in FY21 Advertisement revenues of broadcasters have been under pressure in FY20 on account of macroeconomic challenges. Going into FY21, the Covid-19 impact is expected to result in a washout April, 2020 followed by a slow recovery and normalisation only by H2FY21 led by a benign base and gradual recovery in economy. April revenue hit will also be on account of a steep loss of market share of most GECs to Doordarshan that is now thriving...

Zee Entertainment Enterprises Ltd is India's largest vertically integrated media & Entertainment Company. The company started as content supplier for Zee TV now has portfolio that includes India's leading entertainment channels. The company's portfolio consists of brands like Zee TV, Zee Cinema, Zee Music, Zee Caf, Zee Smile, Zee Action, Zee Premiere, ETC, ETC Punjabi, TEN Sports, Zee Studio, Zee...

Haryana, Himachal Pradesh, and Delhi. With the launch of Zee Punjabi, ZEEL's regional footprint has expanded to 9 languages. Movie channels - Zee Thirai and Zee Biskope, will enhance ZEEL's regional movie portfolio in the markets of Tamil Nadu and Bihar, respectively. The network is preparing for the launch of 2 more regional channels in the next few months. Our regional portfolio had mixed performance during the quarter. We maintained leadership position in the Marathi, Bangla and Kannada markets, with Zee Kannada further strengthening its leadership position, widening the gap over the nearest competitor. Viewership shares in Marathi and Bangla markets declined during the quarter. While Zee Tamil improved its viewership share, Zee...