- 01 Aug 2024
- ICICI Securities
ZEE ENTERTAINMENT: COST RATIONALISATION BOOST MARGINS
ZEEL - 127 Change: 3.24 (2.61 %)News: Zee Entertainment reported strong recovery in margins despite weak ad revenues. The ad revenues declined 3% YoY to ₹ 911 crore, impacted by sports heavy quarter. The overall subscription revenues were up 8.1% YoY to ₹ 987crore, aided by pricing benefits post NTO implementation as well Zee5 revenues. Overall Zee5 revenues at ₹ 224 crore, was up 15% YoY. EBITDA came in at ₹ 272 crore, up 75% YoY basis, with margins at 12.8% (up 500 bps YoY) aided by cost optimisation efforts including right sizing tech team. PAT was at ₹ 118 crore vs. loss of 53 crore in base quarter.
Views: Going ahead, market share recovery Marathi/Tamil along with flagship Hindi channels (important for ad growth), will be the key monitorable. With merger called off, the company has embarked on improvement of margin (guided for FY26 margin of 18-20% with 8-10% revenue CAGR), albeit sustained revenue growth recovery amidst competition could be tough ask going ahead.
Impact: Positive