What should investors do with ZEE post Q1 earnings: Buy, sell or hold?

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26 Aug, 2025 12:21

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Zee Entertainment Enterprises (ZEE) share price slipped 3 percent in the early trade on August 9 after the company reported its June quarter earnings.

The company on Friday reported a consolidated net profit of Rs 208.78 crore for the first quarter ended June 2021. The company had reported a net profit of Rs 29.28 crore in the April-June quarter a year ago.

Its total income during the quarter under review was Rs 1,808.56 crore as against Rs 1,338.41 crore in the corresponding period a year earlier.

Its total expenses stood at Rs 1,501.62 crore during the June 2021 quarter.

Revenue from advertisement was at Rs 926.61 crore in the April-June 2021 quarter. It was Rs 421.06 crore in the corresponding quarter a year ago.

Subscription revenue was at Rs 813.05 crore as against Rs 744.311 crore in Q1/FY 2020-21.

UBS has maintained buy on the stock on attractive valuations. Ad revenues have declined due to Covid-led slowdown. And margin guidance for FY22 is unlikely to be met.

The weaker-than-expected recovery ahead and the likely impact of COVID 3.0 could create some downside risks to our estimates, said the brokerage.

The Q1FY22 advertisement revenues rose 128% YoY, but slower advertisement recovery after the 2nd wave was a disappointment.

CLSA retained its FY22/23 forecasts as the valuation is compelling at 9x PE.

Edelweiss has kept the buy rating as it expect strong advertisement revival to play out in favour of the company.

The company has good viewership across markets & strong underlying advertisement demand and its plan to focus across platforms is likely to deliver strong growth.

We cut our EPS estimates by 20%/9% for FY22/FY23 respectively as recovery in domestic ad-revenues has been delayed (ad-revenues in FY22 can more or less be a replica of FY20 versus earlier expectation of double digit growth).

Delayed recovery is likely to drag margins given the ongoing investment drive in digital, movies and linear TV (Hindi, Marathi and Tamil content to be revamped in 2Q).

Q1 witnessed a yoy recovery on low base, however sequentially the numbers were impacted due to lockdown in most of the states in Q1. Loss of viewership share in some key markets is a cause of concern as competition is getting aggressive, however launch of extensive new content should take care of this from the current quarter.

Ad revenues decelerated in Q1 due to pandemic, but now with the Wave#2 moving down, a sharp recovery in Ad revenue is seen in Q2. Subs revenues are expected to get hit by the uncertain NTO 2.0, but shall get support from Zee5 side of business, losses in which are expected to narrow despite a spike in Q1.

We have lowered our earnings estimates for FY2022E/FY2023E, factoring in slower-than-expected recovery in advertising revenue, disruption in subscription revenue and lower margin owing to higher investments on core businesses.

However, the company has been progressing well on digital business with launching new shows in each quarter and entering into international markets.

Further, the company’s strong focus on regional content and competitive pricing strategy would help to gain market share in the crowded OTT market. We expect the company to deliver a 14% CAGR in adjusted net profit over FY2021-FY2023E.

At 09:21 hrs Zee Entertainment Enterprises was quoting at Rs 193.20, down Rs 3.45, or 1.75 percent on the BSE.

The share touched a 52-week high of Rs 261 and a 52-week low of Rs 148.75 on 04 February, 2021 and 07 August, 2020, respectively.

Currently, it is trading 25.98 percent below its 52-week high and 29.88 percent above its 52-week low.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.