Retain 'buy' on Zee Entertainment – TP hiked to Rs.167 - Geojit BNP Paribas Financial Services

- Buy rating on Zee Entertainment is retained with a target price of Rs.167 over one year. Target price earlier was Rs.153.

- The company has reported solid 1QFY13 beating market expectations significantly on strong advertisement revenue and margin recovery.

- Advertisement revenue in FY13 is expected to grow at 15% as against the earlier growth estimate of 8%, driven by sustained improvement in ratings of flagship channel Zee TV and investment in content.

- EBITDA margin for FY13 has been hiked by 220 bps and EPS estimates for FY13 and FY14 have been raised by 9% each.

- Zee is expected to continue to deliver decent performance in the medium term driven by strong recovery in ad revenue in FY13 on market share gains and possible recovery in ad spent.

- Broadcasters are set to benefit from mandatory digitization that may add subscribers irrespective of the platform (cable or DTH) and Zee is expected to benefit from this also.

- Target price is hiked due to increased EPS estimates for FY13 and FY14.

- The stock is preferred despite its strong outperformance versus the market.

- The company is cash rich and generates free cash flow and may continue to return cash to shareholders through buyback and dividend.

Source : Equity Bulls

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