Emkay Global Financial's research report on Zee Entertainment
Macroeconomic headwinds continued to mar Zee’s advertising growth, down 7% YoY, broadly in line with our estimates. Delayed implementation of NTO2.0 also kept linear TV subscription revenues under pressure, while Zee5 and music continued on their strong growth-path. Zee’s market share inched up by 30bps QoQ to 16.4%, aided by better performance in the Hindi & Tamil markets, while the Marathi market has yet to see a turnaround. Management expects the merger to be consummated by FY23-end, with CCI and shareholder-approval already in the bag. Subscription-revenue recovery would be delayed by a few more quarters, coupled with slower recovery path for ad revenue growth. Margins are likely to remain significantly lower than normalized levels in H2FY23.
Outlook
Owing to slower recovery and margin pressure, we cut our FY23-24E EBITDA by 13-19% and 4% for FY25E. We roll forward the valuation to Sep-24, arriving at an unchanged TP of Rs315 (10x Sep-24 pro-forma broadcasting EBITDA). We raise our FY23/FY24E EPS by ~5% each. We roll forward our valuation to Dec-23 & SoTPbased value to Rs51 (Rs40 earlier), to factor-in full commissioning of the 2,800MW projects.
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