Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Zee Entertainment Enterprises (Z IN, INR 118, BUY)
After adjusting for the one time revenue gain of INR700mn in Q3FY11 due to premature
termination of sports rights, ZEE reported flat YoY growth in revenue in Q3FY12, in line with
expectations. Key positives were jump in subscription revenues by ~12% QoQ and reduction in
sports loss. Key concerns remain degrowth in advertising revenues by ~10% YoY and lack of
improvement in GEC ratings. Overall, we are positive on subscription revenues from a long term
perspective and recommend ‘BUY’ on the stock.
Ad revenues take a huge hit amidst slowdown
ZEE’s total revenues degrew by ~8.5% to INR7548mn in Q3FY12 from INR8249mn in Q3FY11.
However, operating revenues for Q3FY11 include one time revenue of INR700mn for premature
termination of sporting event rights. After making this adjustment, the revenue growth has been flat
on a YoY basis. EBITDA (not adjusted for the one off gain) has degrown by ~3.6% YoY to INR2160mn
from INR2241mn in Q3FY11. PAT stood at INR1393mn in Q3FY12 as compared to INR1600mn in
Q3FY11, a degrowth of ~13% (without adjusting for the one off gain).
Narrowing sports loss aids margins
As compared to total sports loss of INR792mn in H1FY12, sports loss reduced to INR100mn in Q3FY12.
This is in line with the company’s guidance of incurring a sports loss of INR1bn in FY12. Due to lack of
India specific cricket properties in the quarter, the content and programming costs dipped by ~17.6%
YoY, from INR4.1bn in Q3FY11 to INR3.4bn in Q3FY12. This resulted in a slight improvement of
140bps in EBITDA margin (not adjusted for the one off gain) from ~27.2% in Q3FY11 to ~28.6% in
Q3FY12.
Outlook and valuations: Positive; maintain ‘BUY’
We continue to remain positive on ZEE from a long term perspective as we expect subscription
revenues to get a boost from the digitization ordinance and the distribution JV with Star. However, in
the near term the drop in ratings and the ad slowdown will affect the topline. At CMP of INR 118, the
stock is trading at P/E of 18.4x and 15.4x, FY12E and FY13E respectively. We maintain our ‘BUY’ and
‘Sector Outperformer’ rating on this stock. The conference call is scheduled on Tuesday – 24th
January, 2012 at 2pm post which, we will release a detailed report.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Zee Entertainment Enterprises (Z IN, INR 118, BUY)
After adjusting for the one time revenue gain of INR700mn in Q3FY11 due to premature
termination of sports rights, ZEE reported flat YoY growth in revenue in Q3FY12, in line with
expectations. Key positives were jump in subscription revenues by ~12% QoQ and reduction in
sports loss. Key concerns remain degrowth in advertising revenues by ~10% YoY and lack of
improvement in GEC ratings. Overall, we are positive on subscription revenues from a long term
perspective and recommend ‘BUY’ on the stock.
Ad revenues take a huge hit amidst slowdown
ZEE’s total revenues degrew by ~8.5% to INR7548mn in Q3FY12 from INR8249mn in Q3FY11.
However, operating revenues for Q3FY11 include one time revenue of INR700mn for premature
termination of sporting event rights. After making this adjustment, the revenue growth has been flat
on a YoY basis. EBITDA (not adjusted for the one off gain) has degrown by ~3.6% YoY to INR2160mn
from INR2241mn in Q3FY11. PAT stood at INR1393mn in Q3FY12 as compared to INR1600mn in
Q3FY11, a degrowth of ~13% (without adjusting for the one off gain).
Narrowing sports loss aids margins
As compared to total sports loss of INR792mn in H1FY12, sports loss reduced to INR100mn in Q3FY12.
This is in line with the company’s guidance of incurring a sports loss of INR1bn in FY12. Due to lack of
India specific cricket properties in the quarter, the content and programming costs dipped by ~17.6%
YoY, from INR4.1bn in Q3FY11 to INR3.4bn in Q3FY12. This resulted in a slight improvement of
140bps in EBITDA margin (not adjusted for the one off gain) from ~27.2% in Q3FY11 to ~28.6% in
Q3FY12.
Outlook and valuations: Positive; maintain ‘BUY’
We continue to remain positive on ZEE from a long term perspective as we expect subscription
revenues to get a boost from the digitization ordinance and the distribution JV with Star. However, in
the near term the drop in ratings and the ad slowdown will affect the topline. At CMP of INR 118, the
stock is trading at P/E of 18.4x and 15.4x, FY12E and FY13E respectively. We maintain our ‘BUY’ and
‘Sector Outperformer’ rating on this stock. The conference call is scheduled on Tuesday – 24th
January, 2012 at 2pm post which, we will release a detailed report.
No comments:
Post a Comment