Top Brokerage Geojit Suggests Buying Zee Entertainment Stock To Get 19% Return: Check Potential

Top brokerage firm Geojit has suggested investors to buy the stock of Zee Entertainment. ZEE5 posted significant revenue growth of 43% YoY in Q1FY23 as it undertook two price hikes for its annual pack, from Rs. 499 to Rs. 599 in March, and then to Rs. 699 in July.

Stock To Buy: Target Price & Financial Result

The Current Market Price (CMP) of Zee Entertainment is Rs. 259. Geojit has estimated a Target Price for the stock at Rs. 309. This stock has the potential to give a 19% return, in the upcoming 1 year. It is a large-cap stock with a market capitalization of around Rs. 24,907 crore.

Stock Outlook
Current Market Price (CMP)	Rs. 259
Target Price	Rs. 309
Potential 1 year return	19.00%
52 week high share price	Rs. 378.70
52 week low share price	Rs. 167.00

ZEE's revenue grew a mere 4% YoY to Rs. 1,846 crore (-20.5% QoQ) in Q1FY23 because of subdued performance across all its business segments. Advertising revenue for the quarter rose 5.4% YoY to Rs. 976 crore (-12.8% QoQ) as the company lost revenue owing to shift of Zee Anmol from free-to-air to paid channel from 1st April 2022.

Why Should Investors Buy This Stock: Geojit

"Going forward, though, a series of new launches, investments in the over-the-top (OTT) space, and ZEEL-Sony Pictures Networks India merger are expected to boost ZEEL's market share. As Covid subsides, we expect strong growth in advertising revenue. Advertising revenue is expected to improve as the FMCG sector picks up in H2FY23, contributing to significant margin recovery. Further, a series of new show launches, and OTT investments are anticipated to increase ZEEL's market share. Additionally, the ZEEL-Sony merger would help unlock value opportunities. However, subscription revenue may remain under pressure in near term due to pricing embargo. We reiterate our buy rating on the stock with a revised price target of Rs. 309 based on 17x FY24E adjusted EPS," the brokerage firm said.

Company Portfolio

Zee Entertainment Enterprises Ltd, a subsidiary of Essel Group, is an Indian mass media company with interests in television, print, films, mobile content and internet, and allied businesses. As of June 2022, the company's global monthly active users and daily active users reached 103.3 million (23 million YoY increase) and 11.3 million (4.2 million YoY increase), respectively, with healthy average watch time of 196 minutes per viewer per month compared with 190 in Q1FY22. However, subscription revenue declined 5.1% YoY at Rs. 772cr (-9.7% QoQ) on account of embargo on broadcast tariff, mainly due to New Tariff Order 2.0 litigation, and timing of business-to-business deals.

Disclaimer

The above stock was picked from the brokerage report of Geojit. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. 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.