Q2 Results: Here’s What Brokerages Have To Say On Zee Entertainment’s Stock
Punit Goenka, MD, Zee Entertainment Enterprises. (Source: BloombergQuint)

Q2 Results: Here’s What Brokerages Have To Say On Zee Entertainment’s Stock

Shares of Zee Entertainment Enterprises Ltd. fell after its second-quarter profit declined due to an exceptional loss amid negative cash flows and a rise in receivables from group companies.

Shares of the company fell as much as 9.3 percent, the most in nearly two weeks, to Rs 239.85. That compares with 0.57 percent gain in the Nifty.

While the growth from its advertisement business was muted, the company’s overall revenue was aided by a 19 percent jump in subscriptions.

Here’s what brokerages have to say about Zee Entertainment’s second-quarter results:

JP Morgan

  • Maintain ‘Neutral’; Cut target price to Rs 260 from Rs 375
  • In-line Ebitda but negative operating cash flow disappoints
  • Muted advertising revenue growth; domestic subscription healthy
  • Lower valuation multiple on account of risks related to potential stake sale and weak free cash flow

BofAML

  • Maintain ‘Neutral’; Cut TP to Rs 360 from Rs 445
  • Second-quarter revenue in-line; Ebitda beat; guidance unchanged
  • Ad growth better than industry; expect positive operating cash flow in FY21
  • Performance of balance sheet items will drive near-term stock performance

CLSA

  • Maintain ‘Buy’; Hike TP to Rs 320 from Rs 290
  • Q2 revenue and net profit ahead of estimates
  • Ad revenue to pick up in the second half of FY20; working capital expansion drags cash flow
  • Awaiting resolution to Zee’s share pledging crisis

Emkay

  • Maintain ‘Sell’; Cut TP to Rs 240 from Rs 341
  • In-line operating performance
  • Weakening balance sheet adds to the overhang
  • Cut EPS estimates by 10 percent each for FY20-21 to factor in higher programming cost

Edelweiss

  • Maintain ‘Buy’ with TP of Rs 399
  • Ad growth slackens; subscription revenue jumps
  • Ebitda margin contracted owing to weak revenue growth
  • Expect Zee to be key beneficiary of the new tariff order given its strong viewership countrywide

Morgan Stanley

  • Maintain ‘Underweight’ with TP of Rs 248
  • Revenue growth and margin were slightly weaker than expected
  • Cash balance decreased further; receivables and inventory continued to increase
  • Stock to remain volatile until debt issue is resolved

Also read: Q2 Results: Zee Entertainment’s Cash Flows Fall, Auditor Flags Related-Party Linked Deposit

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