HDFC Securities is bullish on Zee Entertainment has recommended buy rating on the stock with a target price of Rs 585 in its research report dated October 10, 2018.
HDFC Securities' research report on Zee Entertainment
Zee Entertainment (Zee) reported yet another strong quarter beating estimates on revenue (+25% YoY) and EBITDA (+38%, margin 34.2%). PAT was in-line owing to higher tax-rate at 40.5%. Advertising revenue grew by a healthy 22.7% and subscription 21.3% (domestic 26%). Zee’s network viewership share improved further to 19.9% (vs. 16.9% in 2QFY18 and 19.2% in 1QFY19) led by strong performance across Hindi and regional GEC channels. Market share gains and planned investments in new regional markets (Malayalam launch in Dec-18, Punjabi in FY20) and movie channels in established markets will help hereon. Zee is well-poised to gain on digital too. Similar to TV, it aspires to be no. 1 digital entertainment destination in 18-24 months. At 29/25x FY19/20E EPS, valuations look tenable given Zee’s superior execution, industry leading growth and margins.
Outlook
Reiterate BUY with TP of Rs 585 @ 30x Sep-20E EPS. The recent correction offers a decent entry point.
For all recommendations report, click here
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