Zee Entertainment - Q2FY21 Result Update - ICICI Securities

Zee Entertainment's (Zee) Q2FY21 operating performance was marred by one-offs (which have become more of a routine - third time in the last five quarters). Results, as expected, were weak with ad revenues down ~26% YoY given the fall in ad pricing that is yet to recover to pre-Covid levels. Like to like subscription growth of 2.8% YoY (like to like domestic subscription growth of 2.3% YoY), was primarily led by Zee5 growth. Higher-than-expected A&P costs and provision for Siti Networks receivables impacted EBITDA, which was at Rs. 313.7 crore, down 54.7% YoY with margins at 18.2%, down 1445 bps YoY. Reported PAT was at Rs. 94.1 crore, down 77.2% YoY, impacted by Rs. 97.1 crore DSRA liability write-off of Siti Networks.

Valuation & Outlook

One-off write-off along with losing market leadership in key markets of Marathi and Bangla languages is a concern. While ad volumes improved QoQ owing to fresh content, ad realisation remains low. Full recovery in ad pricing ahead of festive season will be the key. Potential implementation of NTO 2.0 and impact ahead also remains unknown. We will turn buyers once ad recovery, improved cash flows & related parties mess eases. We maintain HOLD rating with a target price of Rs. 195/share (11x FY22 P/E).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_ZeeEnt_Q2FY21.pdf

Shares of ZEE ENTERTAINMENT ENTERPRISES LTD. was last trading in BSE at Rs.182.05 as compared to the previous close of Rs. 183.35. The total number of shares traded during the day was 926655 in over 8788 trades.

The stock hit an intraday high of Rs. 191.25 and intraday low of 180.75. The net turnover during the day was Rs. 171522596.

Source : Equity Bulls

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