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Zee Entertainment
Recovery in sports business likely
Having met with management today at our 15th Annual India Investor
Conference in New Delhi, these are some of our takeaways...
„Likely lower losses in sport business
Management reiterated that losses in its sports business are likely to reduce
substantially driven by an uptick in ad revenues and marginally lower costs during
the quarter. It expects losses to be in the range of Rs200mn-Rs300mn for 4Q vs
Rs1bn in 3Q and a significant reduction in FY12 losses as well. The company
believes its investments in sports should pay off over the next 2-3 years.
Increase in programming hours to impact margins
Management highlighted that during the quarter it had expanded programming
hours to capture growth in ad revenues. Number of programming hours likely to
increase from 29 to 33 over the next two quarters. Margins likely to be under
pressure in the short term. The company expects ratings to improve given its
thrust on programming.
Likely to gain from digitization
Zee expects to gain from increasing digitization levels in the country through
higher subscription revenues and ability to provide differentiated advertisement
solutions to digital consumers. The company believes ARPUs will trend up for the
DTH industry and Zee should gain in the process.
Price objective basis & risk
Zee Entertainment (XZETF)
Our PO of Rs150 is set at 21x FY12E at PEG of 0.9 (EPS CAGR FY11E-13E) as
against PEG of 1 earlier. We assumed de rating given near term concerns to
ratings at its flagship channel from increasing competitive intensity. ZEEL remains
a company with a long-term macro story offering an investment in improving
demographics, with defensive growth and valuations in line with the Indian media
sector average.
Downside risks : Slowdown in macro economy, increased programming cost due
to competition, higher funding to group companies, and loss of market share.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Zee Entertainment
Recovery in sports business likely
Having met with management today at our 15th Annual India Investor
Conference in New Delhi, these are some of our takeaways...
„Likely lower losses in sport business
Management reiterated that losses in its sports business are likely to reduce
substantially driven by an uptick in ad revenues and marginally lower costs during
the quarter. It expects losses to be in the range of Rs200mn-Rs300mn for 4Q vs
Rs1bn in 3Q and a significant reduction in FY12 losses as well. The company
believes its investments in sports should pay off over the next 2-3 years.
Increase in programming hours to impact margins
Management highlighted that during the quarter it had expanded programming
hours to capture growth in ad revenues. Number of programming hours likely to
increase from 29 to 33 over the next two quarters. Margins likely to be under
pressure in the short term. The company expects ratings to improve given its
thrust on programming.
Likely to gain from digitization
Zee expects to gain from increasing digitization levels in the country through
higher subscription revenues and ability to provide differentiated advertisement
solutions to digital consumers. The company believes ARPUs will trend up for the
DTH industry and Zee should gain in the process.
Price objective basis & risk
Zee Entertainment (XZETF)
Our PO of Rs150 is set at 21x FY12E at PEG of 0.9 (EPS CAGR FY11E-13E) as
against PEG of 1 earlier. We assumed de rating given near term concerns to
ratings at its flagship channel from increasing competitive intensity. ZEEL remains
a company with a long-term macro story offering an investment in improving
demographics, with defensive growth and valuations in line with the Indian media
sector average.
Downside risks : Slowdown in macro economy, increased programming cost due
to competition, higher funding to group companies, and loss of market share.
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