Zee Entertainment Enterprises’ share price added 2.1% in early trade on Friday even as the entertainment player swung into consolidated net loss of Rs 196 crore in the fiscal fourth quarter, compared to a net profit of Rs 182 crore for the same period previous year. The stock price touched a high of Rs 182.75, after opening 1.8% lower. Analysts were positive on the stock outlook, with several recommending a ‘buy’ on ZEE stock.
Should you buy, sell or hold Zee Entertainment Enterprises stock?
Target Price: Rs 245
“Zee’s Q4FY23 results reflect continuous muted ad trends across the industry. Ad revenue declined by 10.2% YoY, while roadblocks surrounding NTO3.0 implementation prevented any uptick in subscription revenue as well. Higher content investments in ILT20, movies and Zee5 resulted in margins slumping to a multi-year low. While FMCG companies have started highlighting increased spending on advertising, Zee is yet to see any meaningful impact on its revenue. Though NTO3.0 has finally been implemented, uptick in subscription revenue should happen only with a lag. Zee5’s EBITDA losses have further widened, though management expects losses to moderate going ahead. Considering these factors, we have reduced our FY24/25 EBITDA estimates by 5.6% each to arrive at a revised TP of Rs245 (8x Mar-25 pro-forma broadcasting EBITDA).”
Prabhudas Lilladher: Buy
Target Price: Rs 240
“We cut our EPS estimates for Zee Entertainment Enterprises by ~21% odd over FY24E/FY25E as 1) widening losses in ZEE5 (EBITDA loss has increased from Rs7,534mn in FY22 to Rs 11,050 million in FY23) 2) entry into sports and 3) sluggish recovery in ad-environment is likely to dent profitability in near term. We expect sales CAGR of 9% over next 2 years with EBITDA margin of 15.4%/18.5% in FY24E/FY25E and retain BUY with a revised TP of Rs 240 (earlier Rs 277). Delay in merger and slower recovery in ad-environment can act as a key overhang in near term.”
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