ICICI Securities upgrades ZEE, Sun TV to 'Buy' on expectations FMCG firms will spend more on advertising

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ICICI Securitiesin its latest note has upgraded its rating for both Sun TV Network and Zee Entertainment Enterprises from 'Add' to 'Buy' and also raised their target prices. The brokerage cites the expectation that these companies will benefit in the medium term as FMCG companies increase their ad spending.The brokerage has lifted the target price on ZEE to ₹195 apiece from an earlier price of ₹155 as it believes the stock should re-rate given the potential tailwinds for TV broadcasters.Also Read: Prediction: These could be the best-performing value stocks through 2030For SUN TV, the brokerage revised the target price higher to ₹1,000 per share from ₹758, anticipating significant growth in ad revenue.

Additionally, it expects steady growth in revenue from cricket franchises. The brokerage believes there is further potential for re-rating given the positive outlook for the media sector.According to the brokerage, advertising and promotion (A&P) spending as a percentage of revenue increased by 180 basis points year-on-year for the top five FMCG advertisers in India in FY24.

However, the revenue impact on general entertainment channel (GEC) TV broadcasters was limited due to a strong cricket season diverting ad spend and a shift towards digital media for promoting premium product categories amidst rural market weakness. Also Read: Stocks to buy: Hindustan Zinc, GMR Airports are Anand Rathi’s emerging stock picks with up to 28% upside potentialIf rural stimulus accelerates in the medium term, FMCG companies are anticipated to boost advertising expenditures on GEC TV broadcasters, according to the brokerage.