Buy This Media Stock For Potential 30% Gains: ICICI Direct

The brokerage firm, ICICI Direct has given a 'buy' call to the Zee Entertainment Enterprises Ltd. (Zee Entertainment) Brokerage has set a buy call for a target price of Rs 315. Zee Entertainment is a TV broadcasting & Software Production industry company with a wide range of entertainment TV Channels and one OTT platform.

Stock Overview- CMP, Returns, 52 Week Low & High

According to the NSE, today, it was opened at Rs 237.40, and after gaining 2.95%, closed at the Current Market Price (CMP) of Rs 244.40. According to the brokerage's given a target price of Rs 315 and the CMP, the stocks ha the potential to gain 30% in the given target period of 12 Months or 1 Year. The 52 week low of the stock is Rs 166.80 and 52 week high is 378.70. In the last 1 year, the stocks gained near 15%, whereas, in the last 1 month, it didn't perform well and however, it remained stable.

The company's TV network viewership share was at 17.3% in FY22 (& 17.1 % in Q4FY22) vs. 18% in FY21, due to relatively soft performance in segments such as Marathi, Tamil and Hindi GEC.

Q4FY22 Results

In its report, the ICICI Direct has said, that Zee reported a weak Q4FY22 performance. According to the brokerage, "Revenues at Rs 2,323 crore were up 18.2% YoY led by other revenues (largely movies production/distribution) at | 348 crores, 9x of Q4FY21. Ad revenues were muted (down 0.3% YoY) to Rs 1120 crore, as the FMCG segment (key advertiser) had cut back on ad spends amid input price pressure. Subscription revenues were up 6.4% YoY to Rs 855 crore, driven by Zee5. EBITDA at Rs 487 crore was down 10% YoY, with margins at 20.9% (up 656 bps YoY), due to content cost (up 49%) and marketing costs (up 42% YoY). PAT, at Rs 181.9 crore, was down 34% YoY, impacted by one-off Rs100.2 crore."

Key triggers of future price performance

According to the brokerage "Overall viewership share improvement, which remains sub-optimal. Turnaround in some key regional markets like Tamil/Marathi as well as Hindi GEC, where they have lost viewership market share. This would also drive recovery in margin performance and cash flow generation. Consummation of merger with Sony."

Buy for a target price of Rs 315

"Zee's share price has declined ~55% over the past five years, owing to promoter debt issue and business challenges. Post a sharp correction of ~28% in the last six months and no visible impediment to merger, we upgrade from HOLD to BUY," ICICI Direct has said.

Further, the brokerage said, "We value Zee at Rs 315 vs. Rs 330, earlier. We roll forward to FY24, valuing it at i.e. 20x P/E (higher multiple as it would have stronger portfolio and promoter holding post-merger)."

Zee Entertainment Enterprise Ltd.

Zee Entertainment (Zee) is one of the largest listed media companies in India with a market capitalisation of Rs 23,509 crore. The company owns & operates a bouquet of 49 TV channels across 11 languages and also an OTT app Zee5. Zee Entertainment is mainly involved in businesses of the entertainment sector particularly Broadcasting of Satellite Television Channels, the Space Selling agent for other satellite television channels, and the Sale of Media Content i.e. programs/film rights / feeds /music rights.

Disclaimer

The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decisions.