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4 Stocks To Buy From The Broadcasting & Multiplex Space Ahead Of Results
Multiplexes and broadcasters are likely to report contrasting results in Q1FY23, according to Emkay Global. While strong box-office collections are likely to drive growth for multiplexe, a slew of nearterm headwinds are likely to results in muted growth for broadcasters, the firm says.
Stocks to buy from the entertainment space according to Emkay Global
| Stocks to buy | Target price | Current market price |
|---|---|---|
| Sun TV | 470 | |
| Zee Entertainment | 310 | |
| PVR | 840 | |
| Inox | 2165 |
"For the multiplexes, regional and Hollywood movies should continue to compensate for the lack of high-quality Bollywood content. Operating parameters, such as ATP and SPH, are likely to remain stable QoQ. Broadcasters' ad revenues should be impacted by input cost inflation faced by advertisers. For both Zee and Sun TV, subscription revenues will likely continue to be affected by delay in the implementation of NTO 2.0," Emkay Global has said.
Strong quarterly performance of multiplexes likely
According to the brokerage Q1FY23 also marks a full quarter of operations after the pandemic. Strong performances by regional, Hollywood and select Bollywood movies have resulted in record box-office collections in Q1FY23. KGF-Chapter 2 became one of the all-time highest grossing movies, with Vikram, Beast and Sarkaru Vaari Paata being the other regional movies to do exceptionally well. "Among Hollywood movies, Doctor Strange in the Multiverse of Madness, Top Gun: Maverick and Jurassic World Dominion did well in the quarter. Bhool Bhulaiyaa 2 was the standout movie among Bollywood releases, even as some big-budget movies failed to make a mark at the box office. Although higher collections of regional movies will not translate into proportional gains for PVR and Inox, they are still likely to report ticket sales well above the pre-Covid levels, supported by ATP increases. Operating metrics should track well, with stable ATP and SPH QoQ, along with a recovery in ad revenues. The companies should see positive cash generation as well," the brokerage has said.
Unfavourable business environment for broadcasters
The unfavorable macroeconomic scenario is likely to weigh on the growth of both Zee and Sun TV in Q1FY23. Advertisers have curtailed discretionary spending due to high input cost inflation, adversely affecting broadcasters' ad revenues. "For Zee, it is likely to be a double whammy as it has been unable to recoup the market share losses and has also removed the Hindi GEC from the free dish platform, which could negatively affect ad revenues. For broadcasters, the delayed implementation of NTO 2.0 should keep subscription revenues under pressure as well. For Sun TV, though Q1 is generally a stronger quarter sequentially, we are conservatively building in flat ad revenues, implying 35% growth YoY. In addition, the recovery in the base quarter was slow and it has maintained market share in the last," the brokerage has said.
