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Zee News –Q3FY11 Result update - BUY
n Ad revenues up in festive season; new channels gain traction
Zee News (ZNL) reported revenues of INR 744 mn in Q3FY11 (ahead of our estimate of
INR 676 mn). Ad revenues grew 33% Q-o-Q to INR 542 mn; for 9mFY11, ad revenues
were up 21.5% over 9mFY10 - impressive, considering the latter was boosted by General
Elections related ad spends. Subscription revenues for Q3FY11, at INR 186 mn, were
down 4% Q -o-Q as ZNL signed fixed fee deal with Tata Sky.
n EBITDA expands with lower new channel losses
EBITDA stood at INR 135 mn (against estimated INR 81 mn), up 92% Q -o-Q. EBITDA
margins for Q3FY11 stood at 18% against 11% in Q2FY11. The robust EBITDA margin
expansion was driven by programming and employee costs (as a percentage of sales)
going down 6.3% and 3.4%, respectively. SG&A expenses (as a percentage of sales),
however, increased 3% Q-o-Q. The existing channels, Zee News, Zee Business, Zee 24
Taas, Zee Punjabi, and 24 Ghanta, reported EBDITA of INR 225 mn and EBITDA margin
of 32.6%. The new channels, Zee News UP, Zee 24 Gantalu, and Zee Tamil, continued to
report operating loss of INR 91 mn (against INR 261 mn in Q2FY11).
n PAT surges on the back of strong operating level performance
Q3FY11 reported PAT, at INR 62 mn (against our estimate of INR 31 mn), was up from
just INR 2 mn in Q2FY11, aided by the strong operating level performance. Interest cost
has dropped 26% Y-o-Y.
n An all-round performance
Zee News, ZNL’s flagship channel, was No. 1 in the prime time slot in the top 8 metros.
24 Ghanta was No. 1 in Q3FY11 in the West Be ngal news market, both in terms of time
spent per viewer and relative share. Zee Tamiz has been closing in on the 100 GRP mark
in the Tamil market. Other new channels, Zee 24 Gantalu and Zee News UP, have also
enhanced their viewership shares in the Andhra Pradesh and Uttar Pradesh/Uttarakhand
markets, respectively.
n Outlook and valuations: Good prospects; maintain ‘BUY’
We continue to prefer ZNL as a good pick in the news broadcasting space. It has multiple
growth drivers— strong bouquet of news channels, rising viewership, strong
management and overall improvement in the advertisement industry. We expect it to be
one of the key beneficiaries of the uptick in advertisement spending and, hence, maintain
our ‘BUY’ recommendation on the stock. On relative retu rn basis, we rate the stock
‘Sector Performer’.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Zee News –Q3FY11 Result update - BUY
n Ad revenues up in festive season; new channels gain traction
Zee News (ZNL) reported revenues of INR 744 mn in Q3FY11 (ahead of our estimate of
INR 676 mn). Ad revenues grew 33% Q-o-Q to INR 542 mn; for 9mFY11, ad revenues
were up 21.5% over 9mFY10 - impressive, considering the latter was boosted by General
Elections related ad spends. Subscription revenues for Q3FY11, at INR 186 mn, were
down 4% Q -o-Q as ZNL signed fixed fee deal with Tata Sky.
n EBITDA expands with lower new channel losses
EBITDA stood at INR 135 mn (against estimated INR 81 mn), up 92% Q -o-Q. EBITDA
margins for Q3FY11 stood at 18% against 11% in Q2FY11. The robust EBITDA margin
expansion was driven by programming and employee costs (as a percentage of sales)
going down 6.3% and 3.4%, respectively. SG&A expenses (as a percentage of sales),
however, increased 3% Q-o-Q. The existing channels, Zee News, Zee Business, Zee 24
Taas, Zee Punjabi, and 24 Ghanta, reported EBDITA of INR 225 mn and EBITDA margin
of 32.6%. The new channels, Zee News UP, Zee 24 Gantalu, and Zee Tamil, continued to
report operating loss of INR 91 mn (against INR 261 mn in Q2FY11).
n PAT surges on the back of strong operating level performance
Q3FY11 reported PAT, at INR 62 mn (against our estimate of INR 31 mn), was up from
just INR 2 mn in Q2FY11, aided by the strong operating level performance. Interest cost
has dropped 26% Y-o-Y.
n An all-round performance
Zee News, ZNL’s flagship channel, was No. 1 in the prime time slot in the top 8 metros.
24 Ghanta was No. 1 in Q3FY11 in the West Be ngal news market, both in terms of time
spent per viewer and relative share. Zee Tamiz has been closing in on the 100 GRP mark
in the Tamil market. Other new channels, Zee 24 Gantalu and Zee News UP, have also
enhanced their viewership shares in the Andhra Pradesh and Uttar Pradesh/Uttarakhand
markets, respectively.
n Outlook and valuations: Good prospects; maintain ‘BUY’
We continue to prefer ZNL as a good pick in the news broadcasting space. It has multiple
growth drivers— strong bouquet of news channels, rising viewership, strong
management and overall improvement in the advertisement industry. We expect it to be
one of the key beneficiaries of the uptick in advertisement spending and, hence, maintain
our ‘BUY’ recommendation on the stock. On relative retu rn basis, we rate the stock
‘Sector Performer’.
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