Zee Entertainment Q4FY21 Update | Mcap: INR 184bn, Buy, TP: INR 300 | CMP: INR 192 | - Indian Broadcasting World
SUBSCRIBE
JOBS
Custom Image
Go Back
3 years ago 09:32:24am Television

Zee Entertainment Q4FY21 Update | Mcap: INR 184bn, Buy, TP: INR 300 | CMP: INR 192 |

New Delhi, 30-November-2021, By Karan Taurani, VP, Elara Capital

Zee acquired rights of Emirates Cricket Board

Digital business remains a drag

View
Zee has reported a domestic ad revenue decline of 20% YoY, largely in line with industry estimates, despite a hefty ad revenue gain due to Zee Anmol moving towards FTA in June ’20. Ad growth challenges are expected to persist throughout H1FY22 due to lock-down in most states. However, the negative impact on ad revenue is estimated to be lower versus the first wave of COVID due to: 1) better contingency planning and preparedness in terms of live GEC shoots, which are largely ongoing, 2) ramp up in vaccinations, which may lead to lock-downs easing sooner than Wave I. We thereby expect a sharp recovery H2FY21 onwards, which will lead to a 20%YoY ad growth in FY22E over a low FY21 base (still down 5% versus FY20-pre-COVID levels). Subscription revenues are expected to remain muted, with uncertainty around NTO 2.0 implementation – This is an overhang which should cap margin improvement. lure EBITDA margin estimates are largely in line with management guidance after factoring in negative impact from increased content cost. On the digital business front, Zee5 is estimated to report huge gains in Q1FY22 on Radhe’s TVOD/OTT premiere. This is because subscriber addition has not shown enough strength to match up to hefty content costs paid for the film. Also, piracy has been an added drag on viewership. On a steady-state basis, excluding the impact of Radhe, Zee5 is still not promising enough to post better-than-industry average (video advertising) growth despite a low base versus other OTTs (Hoststar, YouTube etc.). Over dependence on telecom too limits strong growth prospects on the company’s SVOD revenue base for now. Despite all these concerns on the digital front, traditional business prospects remain strong with: 1) traction in regional genre and 2) best profitability versus peers.

Valuation
The stock is trading at an inexpensive 13.6x/12x basis FY22E/FY23E. We maintain Buy on Zee with a TP of lNR 300 based on 16x one-year forward P/E after factoring in Zee5 valuations (SOTP basis). We believe positive surprise on Zee5 revenue will act as a re-rating catalyst.

(The views expressed in the article are those of the writer and indianbroadcastingworld.com need not necessarily subscribe those views)

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Posts

Our Events

  • img
    SatCab Symposium

    SatCab symposium organized by Aavishkar Media Group is an annual event. It's a well-informed event where we have a panel discussion on the current affairs and future forecasting on our industry.

  • img
    BCS
    Ratna Awards

    BCS Ratna Award organized by Aavishkar Media Group is an annual event. In this award function, a community of our industry is honored by receiving the award for the contribution of their work.

  • img
    Chetna Yatra

    Chetna Yatra organized by Aavishkar Media Group is an annual event. Held by Dr. AK Rastogi, Chairman of Aavishkar Media Group. Pilgrimage India in his car for connecting the people of our industry.

  • img
    Imaan India Sammaan

    Imaan India Samman is an event mobilized by Aavishkar Media Group, which was launched in 2012. Giving the award to the NGOs for giving their contribution to society.

Youtube Videos