Hold Zee entertainment; target Rs 136: KRChoksey

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Hold Zee entertainment; target Rs 136: KRChoksey

KRChoksey has maintained hold rating on Zee entertainment (ZEEL) with a target price of Rs 136 in its January 27, 2012 research report.

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KRChoksey has maintained hold rating on Zee entertainment (ZEEL) with a target price of Rs 136 in its January 27, 2012 research report.

"Zee entertainment's Q3FY12 numbers were in line with our estimates. Net sales stood Rs 755crs, a marginal growth of 5% over QoQ and were down 8.5% YoY mainly on account of lower advertising revenue. EBITDA for the quarter was Rs 216crs which was up by 3.8% QoQ and declined by 3.5% YoY. EBITDA margin was 28.6%, marginally down by 40bps over Q2FY12 and up by 150bps YoY. Net profit for the quarter was Rs 136cr, degrowth of 17.3% QoQ and 14.7% YoY. Strong subscription revenue was commendable however decline is advertising revenue shows signs of lower advertising spend more eminent."

"ZEEL reported advertising revenue of Rs 396cr, a growth of just 0.1% QoQ and down by 10% YoY. Generally Q3 is the strongest quarter in terms of advertising revenue on the back of festive season, however the company missed the trend as advertising spend has come down substantially. The management is optimistic about the advertising spends to come on track. The company reported subscription revenue of Rs 326cr, a strong growth of 12% QoQ and 15.7% YoY. This was driven by Zee Star JV had many contracts renewal which lead to growth in subscription revenue. However the management guided this growth is not sustainable going forward. Earlier the management has guided Rs 100cr loss for their sports property. The company had reported loss of 78cr in H1FY12 and Rs 10cr in Q3FY12. Lower loss in sports property will improve the margins going ahead."

"Media industry and particularly broadcasting companies are going through a bad patch of slowdown in advertising spend. We believe companies in this space will post early single digit advertising growth for FY12E. We remain positive on ZEEL as subscription revenue will grow at healthy rate. Also reduced losses in sports segment will help to improve margins.et and positive development on Sports business front. The stock is trading at 20.9x and 19x PE to FY12E and FY13E respectively. We maintain our 'HOLD' recommendation on the stock with a target price of Rs 136 by assigning multiple of 20x PE to its FY13E EPS of Rs 6.8," says Emkay Global Financial Services research report.

Institutional holding more than 40% in Indian cos

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