India’s Media, Entertainment & Publication (M&E) sector is experiencing robust growth, valued at Rs 2.3 trillion in 2023 and projected to reach Rs 3.1 trillion by 2026. This growth is driven by digital media, which now contributes 38 percent of the sector, highlighting a significant shift towards new media platforms.
Price movement
With a market capitalization of Rs 9,888.55 crore, the shares of Zee Entertainment Enterprises Ltd were trading at Rs 103.00 per share, increasing around 2.79 percent as compared to the previous closing price of Rs 100.20 apiece.
Brokerage Recommendations
CLSA, one of the well-known brokerages globally, gave a ‘Buy’ call on the Entertainment stock with a target price of Rs 170, indicating a potential upside of 65 percent from Tuesday’s closing price of Rs 103 per share.
Rational
CLSA noted Zee Entertainment’s shares plunged 55 percent after its $10 billion Sony merger collapsed, leaving the stock at “rock-bottom” 8x valuations. The brokerage expects a re-rating driven by advertising-led growth, while Zee, India’s No. 2 TV network, strengthens its OTT presence through ZEE5’s expansion.
Zee Entertainment’s EBITDA margins have risen to 16 percent, with CLSA projecting a 6-percentage-point increase by FY27. The company holds zero debt and ₹1,700 crore in cash. CLSA expects 22 percent EBITDA and 33 percent PAT CAGR for FY26-27, predicting the stock could double within 12-24 months.
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Financial Analysis
Zee Entertainment’s subscription revenue grew 8.2 percent YoY in nine months of FY’25, aided by a new RIO and ZEE5’s positive contribution. Q3 FY’25 ad revenue rose 4 percent QoQ but fell 8 percent YoY due to weak FMCG spending. The company is expanding international ad sales, which grew 22 percent YoY.
Future Outlook
The company aims to accelerate revenue growth while maintaining 18-20% margins by FY’26. A busier movie calendar in Q4 FY’25 could boost revenue but may impact margins. Management remains optimistic about a gradual recovery and expects to benefit from increased advertiser spending in the future.
Company Profile
Zee Entertainment Enterprises Limited is an India-based media and entertainment company. The Company is mainly engaged in the business of broadcasting general entertainment television channels, such as non-news and current affairs television. It operates in content and broadcasting segments.
Written by Abhishek Singh
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