Buy Zee Entertainment; target of Rs 428: Edelweiss Securities

Edelweiss Securities' report on Zee Entertainment

We attended LTI's Analyst Day in which management presentations and commentary reconfirmed the confidence in revenue growth sustainability, led by cloud, data and digital services. It expects the usual seasonality - a stronger H2 vs. H1 - to continue in FY22 too. Management indicated that the large deal pipeline remains robust at USD2.07bn (USD1.9bn a year ago), with new logos contributing 44% to the deal pipeline. Management is confident of top-quartile revenue performance, and expects at least USD2bn revenue, with 14-15% NPM in FY22 on strong demand and good progress on client mining. LTI has put in place a clear sales strategy to drive growth, under which it will consolidate and grow the 50 key Accounts, harvest high-potential growth accounts (53 F500 accounts identified), and incubate new growth engines (digital solutions and next-gen alliances).

Outlook

Maintain ‘BUY’ on ZEEL with a TP of INR428 as board-related concerns are likely to get addressed one way or other.