Motilal Oswal's research report on Zee Entertainment
Zee Entertainment’s (Zee) revenue continued the declining trend as 2QFY25 revenue fell 18% YoY (5% miss) on softer advertising revenue (-8% YoY, 1% miss) and lower revenue from other sales and services (-77% YoY on a high base (2QFY24 boosted by Gadar 2 release). However, Zee’s strong control over costs and a further reduction in Zee5 losses led to 18%/15% QoQ jump in EBITDA/adj. PAT (21%/35% beat). The management indicated that advertising revenue saw pick-up in Sep’24, which should continue in 3Q with the onset of the festive season. However, a strong and sustainable pick-up in rural consumption is required to maintain healthy ad revenue momentum beyond 3Q.
Outlook
we await the outcome of the ongoing litigation for ICC rights with Star before we turn more constructive on Zee. We retain our neutral rating with a TP of INR145.
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