Buy Zee Entertainment - Fantastic Results - Consortium

Zee Entertainment's Q3FY13 results have been much higher than expectation. The company reported a topline of Rs 938.8 crore, up 24.4% YoY, driven by robust ad revenue growth of 28.8% .The subscription revenue was in line at Rs 409.8 crore. Healthy growth in ad revenue aided the EBITDA margin, which stood at 27.8% against market expectation of 24.0%. The company reported an EBITDA of Rs 261.1 crore growing 20.9% YoY. PAT also beat expectations widely to stand at Rs 194.1 crore, growing 42.8% YoY. The company continued to post robust ad growth. Also, with impending digitisation, the subscription revenue is poised to more than double in FY12-15. Also, improvement in margins has been a positive sign for the quarter. We recommend a buy on the stock with target price of Rs 270.

Good revenue growth!

The average weekly GRPs of ZEEL declined to 198 from 237 in Q2FY13, with a relative market share of 19% among the top 5 GECs. This could be due to Dance India Dance: Dance Ke Superstars moving out. However, the company continued with handsome ad revenue growth of 28.8% YoY while subscription revenues grew 25.6%.It is expected to continue grow on the back of investment in content and impending digitisation. Advertisement revenues is expected to grow at 22.9% and 9.1% and the subscription revenue at 25.4% and 18.9% in FY13 and FY14, respectively.

Fantastic results - Buy

The company witnessed robust ad growth in a relatively subdued economic environment on account of increased investment in good quality content and rate hike while subscription revenues grew on account of ongoing digitisation. Overall subscription revenue to double from FY12-15 to reach Rs 2554.5 crore in FY15E. BUY with a target price of Rs 270 at 23x FY15E EPS of Rs 11.7.

Source : Equity Bulls

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