Buy Zee Entertainment Enterprises; target of Rs 290: Prabhudas Lilladher
Prabhudas Lilladher is bullish on Zee Entertainment Enterprises has recommended buy rating on the stock with a target price of Rs 290 in its research report dated January 05, 2021.
January 14, 2021 / 08:55 PM IST
Prabhudas Lilladher's research report on Zee Entertainment Enterprises
We initiate coverage on Zee Entertainment Enterprises Ltd (ZEEL) with a BUY rating amid 1) concrete steps taken to strengthen governance and enhance disclosure levels 2) consistent improvement in viewership share (increased from 11.6% in CY11 to 18.4% in CY19) and 3) likely emergence of ZEE5 as future growth engine in the changing global content consumption paradigm. We expect revenue CAGR of 4.1% over FY20-23E backed by increasing viewership share, launch of 4 regional channels (Zee Punjabi, Zee Thirai, Zee Picchar and Zee Bispoke), increasing viewership of HD channels (16 channels, 35% HD penetration) and selective price hikes. Adjusted EBITDA/PAT CAGR is expected to be at 3.5%/0.5% over FY20-23E on higher content cost related to new channels and ZEE5. We believe ZEE5 is one of the strongest content platforms and can be a major growth and re-rating driver in coming years.
Initiate BUY with a TP of Rs290 (16x FY23 EPS of Rs18). Non-core investments, related party transactions, contingent liabilities and accelerated inventory amortization are key risks to our call.
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