Zee Entertainment’s (Zee) revenue was largely flat at INR22b (+10% QoQ, 5% beat) as the impact of weak domestic ad revenues (-27% YoY) was offset by a 3.2x YoY jump in other sales and services (movie releases). However, EBITDA was broadly in line (-10% QoQ), as margins are typically lower in the movie business and cost control benefits are largely realized. Zee5 losses declined to INR750m (from INR1.4b QoQ), led by higher syndication revenue. With the costs largely optimized, focus is now on: 1) driving 8-10% revenue growth through re-entry into Free-to-Air (FTA), focus on newgenres and regional languages, and 2) achieving guided EBITDA margins of 18-20% in FY26E.
OutlookZee’s valuations have turned attractive. However, a sustained recovery in domestic advertisement revenue and a favorable outcome in ongoing litigation for ICC rights with Star remain the key drivers for a re-rating. We reiterate our neutral rating with a TP of INR125 (earlier INR115).
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