Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Ad revenue lacklustre, focus on higher content creation
ZEEL’s Q1FY12 PAT of Rs 1.27bn came in below our expectations (Rs 1.42bn)
primarily on account of (a) flat ad revenues, (b) higher sports business losses of
Rs 566mn and (c) one-time branding costs of Rs 210mn for the quarter. While the
management has guided for muted ad revenue outlook (<10% growth), its guidance
on greater content creation and limited sports business losses over the coming
quarters is encouraging. However, given the lack of clarity on both, ad revenue
growth and how the sports business losses would be contained, we maintain our
earnings estimates and HOLD rating on the stock.
Muted ad revenues: ZEEL recorded a 3% YoY revenue growth to Rs 7bn, lower
than our estimate of Rs 7.5bn for the quarter. While subscription revenues grew
16.7% YoY to Rs 3.1bn, ad revenues remained flattish YoY at Rs 3.8bn on lower ad
spends across major sectors like FMCG and financial services. In this backdrop, the
management has guided for muted ad revenue growth of <10% in FY12.
DTH subscription continues to grow; international remains lacklustre: In the
subscription segment, while DTH revenues remained buoyant (up 12.5% QoQ), non-
DTH revenues/international subscriptions dropped 6.8%/10% QoQ. Though the
management expects a recovery in non-DTH revenues (drop partly due to delays in
contract renewal), international subscription remains lacklustre due to the ongoing
crises in Europe.
Focus on higher content creation; guidance on sports business losses
maintained: The management expects to continue investing in content development
and increase its programming hours to 34–35 from ~29 currently. The management
has also maintained its sports business EBIDTA loss guidance of Rs 1bn and expects
this business to breakeven in FY13.
Maintain HOLD: We reiterate a HOLD on the stock in view of (a) a slowdown in
ad revenue growth, (b) rising competition in the Hindi/regional space and (c)
uncertainty on sports business losses.
Other key highlights
The company’s new food channel, Khana Khazana, has been performing in line with the
management expectations.
ZEEL has maintained its lead in the regional Bangla and Marathi segments and looks
forward to increase its investments in other regional channels as well.
The company has a DTH subscriber base of 18.5mn and has seen an improvement in its
yield due to package upgrades by DTH subscribers (no price hike taken by Zee).
The company has a sports inventory of Rs 5.7bn—most of which will be due for renewal
by Dec CY13. The company expects the sports business to breakeven in FY13.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Ad revenue lacklustre, focus on higher content creation
ZEEL’s Q1FY12 PAT of Rs 1.27bn came in below our expectations (Rs 1.42bn)
primarily on account of (a) flat ad revenues, (b) higher sports business losses of
Rs 566mn and (c) one-time branding costs of Rs 210mn for the quarter. While the
management has guided for muted ad revenue outlook (<10% growth), its guidance
on greater content creation and limited sports business losses over the coming
quarters is encouraging. However, given the lack of clarity on both, ad revenue
growth and how the sports business losses would be contained, we maintain our
earnings estimates and HOLD rating on the stock.
Muted ad revenues: ZEEL recorded a 3% YoY revenue growth to Rs 7bn, lower
than our estimate of Rs 7.5bn for the quarter. While subscription revenues grew
16.7% YoY to Rs 3.1bn, ad revenues remained flattish YoY at Rs 3.8bn on lower ad
spends across major sectors like FMCG and financial services. In this backdrop, the
management has guided for muted ad revenue growth of <10% in FY12.
DTH subscription continues to grow; international remains lacklustre: In the
subscription segment, while DTH revenues remained buoyant (up 12.5% QoQ), non-
DTH revenues/international subscriptions dropped 6.8%/10% QoQ. Though the
management expects a recovery in non-DTH revenues (drop partly due to delays in
contract renewal), international subscription remains lacklustre due to the ongoing
crises in Europe.
Focus on higher content creation; guidance on sports business losses
maintained: The management expects to continue investing in content development
and increase its programming hours to 34–35 from ~29 currently. The management
has also maintained its sports business EBIDTA loss guidance of Rs 1bn and expects
this business to breakeven in FY13.
Maintain HOLD: We reiterate a HOLD on the stock in view of (a) a slowdown in
ad revenue growth, (b) rising competition in the Hindi/regional space and (c)
uncertainty on sports business losses.
Other key highlights
The company’s new food channel, Khana Khazana, has been performing in line with the
management expectations.
ZEEL has maintained its lead in the regional Bangla and Marathi segments and looks
forward to increase its investments in other regional channels as well.
The company has a DTH subscriber base of 18.5mn and has seen an improvement in its
yield due to package upgrades by DTH subscribers (no price hike taken by Zee).
The company has a sports inventory of Rs 5.7bn—most of which will be due for renewal
by Dec CY13. The company expects the sports business to breakeven in FY13.
No comments:
Post a Comment