Zee Entertainment - Q4FY20 Result Update - ICICI Securities

Zee Entertainment's (Zee) Q4FY20 performance truly had a plot twist of a Bollywood potboiler. The washout ad revenues (~15% YoY decline) were on expected lines (economic slowdown & some Covid-19 impact) but stupendous subscription growth of ~31% YoY was a pleasant surprise (Zee5 contribution now making the difference). The costs, however, told a different story, with a slew of one-offs such an accelerated amortisation expenses of Rs. 259.8 crore, provision of Rs. 343 crore for doubtful debts, exceptional loss of Rs. 113.7 crore towards goodwill write-off and Rs. 383.5 crore MTM losses on overseas investments. EBITDA loss, consequently, was at Rs. 283.9 crore with reported net loss of Rs. 766.7 crore.

Valuation & Outlook

he near term concerns include soft ad outlook as well as impact of NTO 2 (if it gets implemented). The wish-list of possibly better disclosures and cash generations, is what should be looked at, apart from overall improvement in ad environment and Zee5 ramp up. Notwithstanding attractive valuations, we maintain HOLD, with a target price of Rs. 150/share, valuing it at 9x FY22 P/E. We would turn believers once we see visible changes in cash generation and more (rather better) disclosures.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_ZeeEnt_Q4FY20.pdf

Shares of ZEE ENTERTAINMENT ENTERPRISES LTD. was last trading in BSE at Rs.145.4 as compared to the previous close of Rs. 151.65. The total number of shares traded during the day was 1278904 in over 13054 trades.

The stock hit an intraday high of Rs. 154.95 and intraday low of 144.75. The net turnover during the day was Rs. 190188124.

Source : Equity Bulls

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