Maintain 'hold' on Zee Entertainment - TP hiked to Rs.247 - Geojit BNP Paribas Financial Services

- Hold rating has been maintained on Zee Entertainment with an increased target price of Rs.247 as against the earlier target price of Rs.182. The stock is currently quoted in the range of Rs.225.

- The company reported strong 3QFY13 performance, beating analysts' estimates on revenue, EBITDA and EPS.

- The company reported strong advertisement revenue growth of 29% yoy, gaining revenue market share on the back of improved yoy rating.

- Distribution revenue increased 24% yoy driven by digitization.

- EPS estimates for FY14 and FY 15 have been hiked by 7% and 11% respectively.

- The company had the benefit of a low base in FY13 enabling it to beat the industry ad revenue growth rate significantly.

- Zee's flagship channel rating has declined this quarter.

- On the subscription side, it is expected that strong growth to continue because of digitization benefits to accrue to broadcasters over the next few years.

- Target price has been hiked to Rs.247 as the target P/E multiple is raised from 20 to 24.

- TP hike is also due to an increased EPS expectation for FY 14 and FY15 on the back of strong 3QFY13 performance and better outlook.

- The hold rating is maintained despite better outlook and EPS expectations because the stock has almost doubled over the past one year.

Source : Equity Bulls

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