Zee Entertainment hits 52-week low, down 2% on weak March quarter earnings

Shares of Zee Leisure Enterprises (ZEE) hit a 52-week low of Rs 175.80, down 2 per cent on the BSE in Friday’s intra-day commerce after the media main reported a weak working efficiency with earnings earlier than curiosity, tax, depreciation and amortisation (Ebitda) down 70 per cent year-on-year (YoY) and 58.5 per cent quarter-on-quarter at Rs 151.70 crore in March quarter (Q4FY23). Ebitda margin declined to 7.2 per cent from 17.4 per cent in earlier quarter and 21.8 per cent in a 12 months in the past quarter.

The commercial revenues declined (amid weak advert spends), larger film content material and Zee5 prices impacted margins and one-off expenses additional exacerbating the bottomline ache.

The inventory fell under its earlier low of Rs 176.60, touched on February 27, 2023. At 09:24 AM; the inventory had erased early losses and quoted 1 per cent larger at Rs 180.50. Compared, the S&P BSE Sensex was up 0.10 per cent at 61,938.

ZEE posted a consolidated internet lack of Rs 196 crore for Q4FY23, towards a revenue of Rs 182 crore a 12 months in the past. The corporate reported an distinctive lack of Rs 89.90 crore comprising Rs 62 crore in the direction of worker and authorized bills pertaining to the proposed Scheme of Association.

Working income through the quarter was down 9 per cent YoY and flat QoQ at Rs 2,112 crore. The advert revenues declined 10.2 per cent YoY to Rs 1,006 crore, with home advert decline of 10.2 per cent YoY.

ICICI Securities mentioned the commercial revenues have declined owing to weak advert spending by key phase (FMCG), affect of exit from free to air and pullout from few cable networks amid NTO 3 (New Tariff Order) standoff in February for couple of weeks.

The efficiency was weak on all fronts. Going forward, market share restoration in Marathi/Tamil together with flagship Hindi channels (essential for advert progress) the place relative efficiency has been muted, would be the key monitorable. Doubtless merger consummation, stay key triggers (NCLAT assembly slated for Could 26 for the corporate’s enchantment), the brokerage agency mentioned in a be aware.

Continued weak point in advert income as a consequence of inflationary setting, particularly within the FMCG phase, continues to dampen the income visibility of the phase. The identical is, nonetheless, is prone to pick-up from H2FY24, in response to Motilal Oswal Monetary Providers (MOFSL).

The brokerage agency has minimize its FY24 earnings estimate by 16 per cent led by continued investments in each digital and linear content material and a weak income outlook in close to future. MOFSL, nonetheless, preserve its FY25E earnings.

The inventory trades at engaging valuation of 15x FY25E P/E. That is a lot under its historic multiples of 25-30x about three years again. The potential re-rating will likely be ruled by restoration within the advert market, and completion of the Sony merger deal, given the robust market place of the merged entity and the expansion alternative forward, the brokerage agency mentioned.

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