Buy Zee Entertainment Enterprises, target price Rs 272: Emkay Global

Emkay Global has given a buy rating to Zee Entertainment with a target price of Rs 272. The share price moved up by 0.17 per cent from its previous close of Rs 211.45. The stock’s last traded price is Rs 211.80.

Zee Entertainment Enterprises Ltd., incorporated in the year 1982, is a Large Cap company (having a market cap of Rs 20420.33 Crore) operating in Media & Entertainment sector.

For the quarter ended 30-06-2020, the company reported a Consolidated sales of Rs 1312.03 Crore, down 32.75 % from last quarter Sales of Rs 1951.08 Crore and down 34.66 % from last year same quarter Sales of Rs 2008.12 Crore. The Company reported net profit after tax of Rs 29.24 Crore in latest quarter.


Investment Rationale
Consistent improvement in cash generation over the next 2-3 quarters will provide assurance on the delivery on guidance in FY22. Underperformance in the past and balance sheet deterioration should fade away over time with consistent delivery. The company is banking on ZEE5 to drive subscription growth, going forward. Telco partnerships should aid digital subscription revenues as India will continue to see growth in data subscribers. Given the hyper-competitive nature of the OTT space, the brokerage believes that it would continue to see investments for sustaining growth, especially with the presence of numerous global players. It continues to highlight structural challenges faced by traditional broadcasters with the possibility of increased FTTH penetration and changing content consumption habits of urban consumers. Key risks: 1) weaker-than-expected cash generation and balance sheet improvement; 2) delayed ad revenue recovery; 3) significant impact on subscription revenue due to NTO 2.0 implementation; and 4) higher losses from ZEE5.

Promoter/FII Holdings
Promoters held 4.8 per cent stake in the company as of June 30, 2020, while FIIs held 67.3 per cent, DIIs 9.7 per cent and public and others 18.2 per cent.