ICICI Securities's research report on Zee Entertainment
ZEEL’s advertising revenue declined 9.4% QoQ/16.8% YoY, impacted by the IPL and weak FMCG spending. However, management commentary suggests early signs of stabilisation, with potential recovery supported by festive tailwinds and improving rural demand. Gains in TV market share and early traction in Zee Anmol are key positives in linear TV. However, Pay TV subscription revenue declined ~9% YoY, due to pending negotiations with DTH operators on price increase. ZEE5 revenue grew 30% YoY, led by regional language subscription packs, while losses narrowed to INR 658mn. We expect losses to reduce further with operating leverage. While the stock is inexpensive at CMP, we believe a tangible recovery in ad income / resolution of standoff with DPOs may be key for re-rating. Maintain BUY.
Outlook
We maintain BUY with TP of INR 185, based on 20x one-year forward P/E multiple (FY27E). Key risks: Slower recovery in ad/subscription revenue, and slower execution of cost optimisation measures.
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