Zee Entertainment Shares Fall The Most In 11 MonthsFebruary 5, 2021
Shares of Zee Entertainment Enterprises Ltd. fell the most since March as analysts see pressure on margin and cash flows despite improving advertising and subscription revenue.
The broadcaster reported a 33% year-on-year rise in overall revenue at Rs 2,729.3 crore in the quarter-ended December, according to an exchange filing. That compares with the Rs 2,081.5-crore consensus estimate of analysts tracked by Bloomberg.
A Rs 552-crore content syndication deal signed by the company, too, aided the top line.
Advertising revenue rose 7.5% over the year earlier and 43% sequentially, reflecting improving consumer demand and spending.
A 9.3% year-on-year subscription revenue growth in the domestic business was led by television and Zee5.
Operating profit rose 31%, but margin contracted 50 basis points to 26.2%.
The company in an analyst call said it will ramp-up investments in its movie production business as well as Sugarbox—its online content delivery subsidiary.
While some analysts see this as a significant negative, impacting margin, others said the company is prepared to sacrifice margin to pursue growth.
Shares of Zee Entertainment fell as much as 15% to Rs 212 apiece — the lowest in two months. Of the 27 analysts tracking the company, 13 have a ‘buy’ rating, nine suggest a ‘hold’ and five recommend a ‘sell’. The average of Bloomberg consensus 12-month price target implies an upside of 18.6%.