Zee Entertainment’s (ZEE) flagship GEC, Zee TV has crossed the 250 GRP mark after more than 1.5 years to cement its place as the No. 2 behind Star Plus. We are enthused by this development as the growth in GRPs has mainly come from a good performance of fiction shows. In the present poor ad environment, a sustained improvement in GRPs will provide a much-needed boost to ZEE’s revenues (Zee TV’s ad revenues amount to ~20%-25% to its total revenues). Further, irrespective of the winner among DTH or cable operators, ZEE will be one of the safest and most attractive stocks to play the digitisation theme. Maintain ‘BUY’.
��
Zee TV steadily closing in on Star Plus
A strong performance by Zee TV’s weekend shows like DID Little Masters and Fear Files have propelled it to a strong No. 2 position behind Star Plus. As of Week 28 of TAM 2012, Zee TV has GRPs of 253 (an increase of 15 over Week 27) vis-à-vis 276 GRPs of Star Plus, giving the latter a slender lead of only 9%. Colors with 231 GRPs is in third position while Sony is at fourth with 222 GRPs.
Fiction shows finally begin to deliver
Traditionally, ZEE never invested in expensive reality shows as the company believed that such shows were not viable. Instead, it focused on building sustainable viewership through fiction shows and differentiated low cost reality shows. Zee TV has launched two fiction shows, Rab Se Sona Isshq and Fear Files recently. Shows like Punar Vivah and Mrs. Kaushik Ki Paanch Bahuein are doing well. Phir Subah Hogi and Sapne Suhane Ladakpan Ke, launched in Q1FY13, have also taken off well.
Outlook and valuations: Beaming future; maintain ‘BUY’
Sturdy free cash flow generation, ~INR10bn in net cash, minimal debt, secular growth story and a stable dividend policy earn ZEE an unequivocal place among the best stocks to own in the defensive space. We have a TP of INR166 from a one year perspective (2-year target of INR244). At CMP of INR144, the stock is trading at P/E of 22.0x and 18.6x FY13E and FY14E earnings, respectively. We maintain‘BUY/Sector Outperformer’.
Regards,
No comments:
Post a Comment