{"id":647,"date":"2020-01-24T12:00:09","date_gmt":"2020-01-24T12:00:09","guid":{"rendered":"http:\/\/www.assetmultiplier.co.in\/blog\/?p=647"},"modified":"2020-01-24T12:00:10","modified_gmt":"2020-01-24T12:00:10","slug":"zee-entertainment-margins-will-improve-once-ad-revenues-bounce-back","status":"publish","type":"post","link":"https:\/\/www.assetmultiplier.co.in\/blog\/2020\/01\/24\/zee-entertainment-margins-will-improve-once-ad-revenues-bounce-back\/","title":{"rendered":"Zee Entertainment: Margins will improve once ad revenues bounce back."},"content":{"rendered":"\n<p><strong>Update&nbsp;on\nthe Indian Equity Market:<\/strong><\/p>\n\n\n\n<p>On Thursday, NIFTY closed in the green with 0.6% gains. \u00a0The gains were led by YESBANK (+6.6%), IOC (+5.9%), GAIL (+2.8%). The stocks that were beaten down in today\u2019s session included ZEEL (-7.2%), UPL (-3.9%) and CIPLA (-1.4%). Most of the sectoral indices ended positive lead by REALTY (+2.1%), PSU BANK (+1.2%) and BANK (+1.0%). MEDIA (-2.1%) was the only sector that ended in the red.<\/p>\n\n\n\n<p><strong><span style=\"text-decoration: underline;\">Excerpts from an interview with Mr Rohit Gupta, CFO, ZEEL that aired on CNBC-TV18 on 22<sup>nd <\/sup>January 2020:<\/span><\/strong><\/p>\n\n\n\n<ul><li>ZEEL reported 3QFY20 numbers. The growth in\nsubscription revenue continued to be strong at 21.7% for 3QFY20 and 31.0% for\n9MFY20. The economic slowdown and weakness in consumer sectors led to a decline\nin advertisement revenue.<\/li><li>In the last 5 years, ZEEL\u2019s advertising revenue\nhas grown at a CAGR of 16% while the topline growth has shown a CAGR of 12%.\nEBITDA also doubled in the same period.<\/li><li>Current year\u2019s advertising revenue is impacted\nby 2-3 factors. &nbsp;Two of ZEEL\u2019s Free-to-air\nchannels have become paid channels and removal of free dish had an impact of 500\nbps. Also, in 3QFY19, the revenue growth was 20% on back of 30% growth in\n3QFY18. On such high base, the decline this time is high at -15%. Advertising\nrevenue should come back in the next 2-3 quarters.<\/li><li>After TRAI\u2019s new tariff order last year (NTO\n1.0), ZEEL has grown stronger. The reasons being very strong customer connect\nand brand pull of channel. The implementation of the NTO 1.0 has not completed\na year yet and industry is still in a stabilizing phase for the entire\nsubscription revenues. However, NTO 1.0 has been good both for consumers and\nindustry. <\/li><li>ZEEL has been working on improving their balance\nsheet. The cash and equivalents have improved from 1,479 cr to 1,767 cr in\n3QFY20. Management is working on improving FCF and PAT to cash conversion\nratio. They expect to improve both in excess of 50% in the coming year.<\/li><li>ZEEL\u2019s margins have been in excess of 30% for\nmany quarters. However, 3QFY20 margins were lower than 27%. &nbsp;The management says margins will improve as\nthe advertising revenue bounces back.<\/li><\/ul>\n\n\n\n<p><strong>Consensus Estimate: (Source: market screener website)<\/strong><\/p>\n\n\n\n<ul><li>The closing price of ZEEL was&nbsp;\u20b9 279\/- as on 22<sup>nd<\/sup> January\n2020. It traded at 15.9x\/ 13.5x\/ 12.6x the consensus earnings estimate\nof&nbsp;\u20b9&nbsp;17.6\/ 20.7\/ 22.2 for FY20E\/ FY21E\/ FY22E respectively.<\/li><li>Consensus target price is \u20b9 334\/- which implies a PE multiple of 15.0x\non FY22E EPS of \u20b9 22.2\/-<\/li><\/ul>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Update&nbsp;on the Indian Equity Market: On Thursday, NIFTY closed in the green with 0.6% gains. \u00a0The gains were led by YESBANK (+6.6%), IOC (+5.9%), GAIL (+2.8%). The stocks that were beaten down in today\u2019s session included ZEEL (-7.2%), UPL (-3.9%) and CIPLA (-1.4%). Most of the sectoral indices ended positive lead by REALTY (+2.1%), PSU [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[271],"tags":[],"_links":{"self":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/647"}],"collection":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/comments?post=647"}],"version-history":[{"count":1,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/647\/revisions"}],"predecessor-version":[{"id":648,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/647\/revisions\/648"}],"wp:attachment":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/media?parent=647"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/categories?post=647"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/tags?post=647"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}