ZEE Entertainment reported numbers for the quarter-ended December 2018 which were ahead of analyst estimates. Some global brokerage firms such as HSBC and Citigroup also raised their 12-month target price.
Zee Entertainment Enterprises registered a 50.3 percent jump in its Q3FY19 net profit at Rs 562.7 crore against Rs 374 crore in the same quarter last fiscal. Revenue of the company was up 17.9 percent at Rs 2,167 crore against Rs 1,838 crore.
The company reported a 20.6 percent jump in its domestic ad revenue at Rs 1,371.9 crore, while domestic subscription revenue was up 28 percent at Rs 519.2 crore.
Its total ad revenue rose 21.7 percent at Rs 1,462.6 crore, while total subscription revenue jumped 23.3 percent at Rs 618.5 crore, YoY.
Zee enjoys the top spot in most of the brokerage house portfolio. CLSA, which has the most aggressive target of Rs 670, sees an upside of over 40 percent in the stock in the next 12 months from Tuesday’s closing price of Rs 456 on the BSE.
“ZEE’s re-rating is imminent despite concerns on group entity’s debt and promoter pledging. Market share for any consumer play is critical and Zee’s all-India viewership share has inched to 20.2%, up 190 bps YoY and 30 bps QoQ,” Edelweiss said in a report.
“We expect ad revenue to remain strong due to the strong performance of Zee’s channels and favourable ad environment. We maintain 30x 12-month forward P/E to arrive at a target price of Rs 612. At CMP, it trades at 27.1x FY19E and 22.0x FY20E EPS. Zee remains our top pick,” it said.
Here’s what other brokerage firms are recommending on ZEE Entertainment:
HSBC: Hold| Raise target to Rs 485 from Rs 460 crore
HSBC maintained its hold rating on Zee Entertainment and raised its target price to Rs 485 from Rs 460 earlier. Improved channel ranking led to 21 percent domestic advertising revenue growth.
The subscription revenue growth came in healthy at 29 percent. The management recognises need to increase investment in digital platform. The company maintains 30 percent margin guidance stake sale plan on track.
Deutsche Bank: Buy| Target: Rs 575
Deutsche Bank maintains a buy rating on Zee Entertainment with a target price of Rs 575.
Strong operating performance continues. The global investment bank has modeled an earnings CAGR of 19 percent over FY19-21. Promoters' intention to sell up to 50 percent positive for minority shareholders.
Citi: Buy| Raise target to Rs 575 from Rs 550 earlier
Citigroup maintained its buy call on ZEE Entertainment post Q3 results and raised its 12-month target price to Rs 575 from Rs 550 earlier.
The global investment bank has also raised estimates post the strong Q3 beat by 5-8 percent. The stock is Citi’s preferred pick as the core TV business remains strong.
We are seeing some encouraging trends on zee5 which makes an interesting play on online video theme, said the report. Going forward, induction of a strategic partner could be positive for minorities, added the report.
CLSA: Buy| Target: Rs 670
CLSA maintains a buy rating on ZEE Entertainment post Q3 results with a target price of Rs 670. The company displayed strong growth in TV segment and encouraging ramp-up in zee5.
The December quarter results were above estimates, led by higher domestic ad & subscription revenues. Going forward, the outlook for broadcasting business remains strong for Zee.
CLSA upgrades its forecasts by 1-4 percent and expects the company to deliver 19 percent earnings CAGR in FY19-21.
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.
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