Zee Entertainment share price drops over 4% after Q3 results; brokerages cut target; Should you buy?
₹180.35 apiece on the BSE. Zee Entertainment Enterprises (ZEEL) posted a net profit of ₹58.5 crore in the quarter ended December 2023, up 140% from ₹24.32 crore during the same period a year ago. Zee’s advertising revenue fell 3.3% to ₹1,027.4 crore from ₹1,063.4 crore, while subscription revenue increased 3% to ₹921.3 crore from ₹894.4 crore, YoY.
The company is charting a three-pronged approach – cutting costs, reducing overlaps between businesses, and enhancing quality to regain margins – after its merger with Sony Pictures Entertainment collapsed, Zee’s managing director and CEO Punit Goenka said in an earnings call. Read here: Zee plans to cut costs, reduce overlaps after merger with Sony collapses The management outlined a recovery plan, which targets steady state 8-10% revenue CAGR coupled with an EBITDA margin of 18-20% by FY26. However, analysts believe necessary interventions will have a one-time cost that would result in near-term margin pressure before recovery from H2FY25.
Here's what analysts have to say on Zee Q3 results and Zee share price: Failure of the merger can also have possible cases of shareholder activism, in our view. Also, multiple legal issues can result in potentially significant losses in case of an unfavorable verdict, even as such issues consume management bandwidth, Emkay Global Financial Services said. It cuts FY24-26E EBITDA estimates by 5-16%, to factor-in the near-term margin weakness on account of interventions.
It believes emergence of a new buyer or partner would be a key trigger for a stock re-rating. The brokerage firm retained its ‘Negative’ view on the stock and maintained a ‘Sell’ rating, cutting the target price to ₹165 per share. Zee Entertainment posted Q3FY24 revenue and
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