Zee Entertainment Shares Fall The Most In 11 Months

February 5, 2021 0 By boss

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%.

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