Zee Entertainment Enterprises: The media and entertainment industry in India is a dynamic and fast-growing sector that has seen substantial growth in recent years. It includes a wide range of categories, including television, cinema, out-of-home advertising, radio, animation, visual effects, music, gaming, digital advertising, live events, and print media. The media and entertainment business in India contributes significantly to the country’s economic stability and cultural identity.

Company Overview Of Zee Entertainment Enterprises

Zee Entertainment Enterprises was established in 1991 and its Founder was Subhash Chandra. It is a well-known Indian media company that has established itself as a major participant in the entertainment industry. The company has operated across many areas including the television, print, internet, cinema, and mobile content industry.

Zee Entertainment Enterprises is partly owned by Essel Group, it operates in more than 170 countries having 1.3 billion viewers worldwide.  Zee Entertainment Enterprises has Operated in 4 segments such as broadcast, digital, movies, music and sports. The domestic broadcast has 50 channels in 11 languages with a 16.8% network share.

It has 5000+ movies and 572 million viewers every week. The company has provided 40 channels in 120 countries worldwide and ZEEL has a 19.1% of viewers share in South Asian countries. They are No. 1 in Hindi movies in the UK and Hindi GEC in MENA.

Note: If you want to learn Candlesticks and Chart Trading from Scratch, here’s the best book available on Amazon! Get the book now!

telegram channel

Segment Analysis

The digital segment contributed total revenue from ZEE5 of 2200 million in FY23 with a massive content library featuring over 350 films, 1750 TV shows, 230+ originals, and 5 lakhs hours of on-demand content. Revenue from the Movies business was 4171 million in FY23. 

The music segment provides 22 different languages in India and 10 billion monthly YouTube views. The Company sponsored the UAE-based international league T20 in FY23 and was telecasting 10 channels in 3 languages.

Financials Of Zee Entertainment Enterprises

The Company’s revenue has been fluctuating over the past 5 years. It increased from ₹8087.9 Cr in FY23 to ₹8637.2 Cr in FY24 by 6.79%. In FY24, the company subscription increased by 10% and other sales & services by 32% compared to FY23. The company has a revenue growth of CAGR 1.52% over the past four years. Zee Entertainment Enterprises’s revenue has increased with a CAGR of 1.5% between FY20 to FY24.

In FY23 net profit decreased massively by 76.42% compared to the previous year because of the revenue drop and increase in expense by 9.1% such as operational cost by 10.56%, exceptional items and deferred tax. The net profit has decreased from ₹251.4 Cr. in FY23 to ₹199.3 Cr. in FY24 because of the increasing expenditure of 10.6%.

The operating profit margin of the company decreased from 10.8% to 8.46% in FY24 and the Net profit margin will is 1.63%. It is a debt-free company. ROE and ROCE of the company will be 1.3% and 6.52% respectively.

FY24FY23FY22FY21FY20
Revenue (in Cr)₹8637.2₹8087.9₹8185.7₹7729.9.₹8129.9
Net Profit (in Cr)₹199.3₹251.4₹1053.8₹800.1₹524.6
Operating Profit Margin (%)8.4610.819.4618.6217.07
Net Profit Margin (%)1.630.5911.6710.266.48
ROE (%)1.30.448.877.925.63

Merger Fiasco with Sony Pictures Networks India

Zee Entertainment Enterprises is operated by Subhash Chandra and Sony is owned by Sony Corporation of Japanese Company. Both companies are large media networks in India. On 21st September 2021, ZEEL announced the merger with the Indian media unit of  Sony Group Corporation (Culver Max Entertainment) to create a new entity as Sony Pictures Networks India (SPNI). 

ZEEL and Sony decided to merge, creating the largest media company in India valued at $10 billion. It was set to expand its presence in India and globally like Zee Entertainment Enterprises has a strong media network in the Indian market and Sony has a strong global presence which will create a unique synergy for the company’s growth.

Their goal was to compete with top streaming players like Netflix and Amazon Prime Video. The merger will help to offer content in multiple languages to a wide array of audiences and reduce the cost of streamlining operations and Sony held a Majority stake of  50.86% of the new company, the Zee Entertainment Enterprises founder held 3.99%, and other ZEEL shareholders held 45.15%.

The founder has the option of increasing the stake in the company to 20%. On 14 September 2021, Rakesh Jhunjhunwala bought a stake of 5 million shares in ZEEL on that day the stock hit a surge of 40%. When the news came out of the merger on 21 September 2021, the stock price of  Zee Entertainment Enterprises increased by 31.72% like a rocket.

The founder has been forced to sell his stake because of the settlement of debts. When that time lenders were asked for money from Subhash Chandra and Family, because they had one chance to get the money back and then lastly repay to some vendors (IndusInd bank).

The National Company Law Appellate Tribunal (NCLAT) has issued notice to Zee Entertainment Enterprises to appeal by IDBI for insolvency against the company. They had filled notice and were unable to recover dues of almost 150 crore from ZEEL. Sony requested a reconsideration when Goenka was subjected to regulatory scrutiny by SEBI (Securities and Exchange Board of India) for suspicions of fund misuse.

SEBI prohibited Goenka and Essel Group Chairman Subhash Chandra from holding key management roles in any listed firm in June 2023, but Goenka’s prohibition was later reversed by the Securities Appellate Tribunal. Sony was probably concerned about the regulatory burden and asked for India MD & CEO NP Singh to manage the merged business. This was rejected by Goenka.

On 22 January 2024, Sony terminated the merger with Zee Entertainment Enterprises because of the leadership disputes and another reason was they didn’t want the headache of dealing with someone who has been accused of stealing from both lenders and the company itself. Sony has demanded $90 million for termination fees from ZEEL.

Future Plans Of Zee Entertainment Enterprises

  • The board of the company will raise Rs 2,000 crore in a private placement, Qualified institutional placement and preferential issue. It is used for the future growth of developing media prospects.
  • Zee Entertainment Enterprises is the 2nd largest media and entertainment firm in India having an 18 to 20% market share. The management expects ZEE5 and TV viewership will be improving by 5% compared to the previous year.
  • Zee Entertainment Enterprises aims to maintain a revenue of CAGR and  EBITDA margin of 8-10% and  18 to 20%  respectively in FY26.
  • ZEEL is planning to lay off the workforce by 15% in the segment of broadcast, digital, movies and music sections. It helps to reduce the cost of the company.
  • It is planning to improve towards implementing the interventions, offsetting underlying operating performance improvements and causing softness on margins.

Financial Metrics Of Zee Entertainment Enterprises

The key financial metrics of Zee Entertainment Enterprises are given below.

ParticularsAmountParticularsAmount
CMP155.5Market Cap (Cr.)14739
EPS (TTM)1.47Stock P/E (TTM)105.88
ROE (%)1.30%ROCE (%)6.52%
Promoter Holding (%)3.99%FII Holding (%)19.18%
Debt to Equity0.02Price to Book Value1.38
Operating Profit Margin8.46%Net Profit Margin1.63%

Conclusion

Zee Entertainment Enterprises is well-positioned for a turnaround, with increased advertising and subscription income, cost-cutting initiatives, revenue growth with a CAGR of 8 to 10%, EBITDA margin maintained by 18-20%, margin recovery in Q2 of FY25 compared to FY24, higher quality in content strategy and although the firm has seen some setbacks with increased revenue and net profit in FY24.

The company has solid fundamentals and the management’s recovery tactics suggest excellent forecasting for the future to boost the company. What are your views about this article and stock? Please let us know in the comment section below.

Written by Nikhil Naik

By utilizing the stock screenerstock heatmapportfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks, also get updated with stock market news, and make well-informed investments.


Start Your Stock Market Journey Today!

Want to learn Stock Market trading and Investing? Make sure to check out exclusive Stock Market courses by FinGrad, the learning initiative by Trade Brains. You can enroll in FREE courses and webinars available on FinGrad today and get ahead in your trading career. Join now!!