Motilal Oswal's research report on Zee Entertainment
Zee Entertainment (Z)’s consolidated EBITDA/Adj. PAT declined 70%/77% YoY (36% miss) in 4QFY23 led by continued weakness in ad revenue (-10% YoY), 7-8% impact of FTA withdrawal and high investments in content. Z reported INR900m exceptional loss, which further led to an adj. PAT of INR669m, down 77% YoY during the quarter. We have cut our FY24 earnings estimate by 16% due to a slower recovery in the ad market and continued investment but largely maintain our FY25 estimate. Though we firmly believe that the merged entity will have strong competitive position in both linear and digital segments, this is not captured in the valuation.
Outlook
Further, merger timeline remains the key monitorable. Valuing the stock at 18x FY25E EPS, we arrive at our TP of INR210. We maintain our BUY rating on Z.
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