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Zee Entertainment share gains 5% despite weak Q1 earnings; check what brokerages say

Following the earning update, share price of Zee Entertainment Enterprises opened at Rs 630.90 and later climbed 5.2% to the intraday high of Rs 183 on BSE against the earlier close of Rs 173.95. The Zee Entertainment Enterprises stock earlier also touched an intraday low of Rs 169.35, falling 2.64%

twitter-logoBusinessToday.In | August 19, 2020 | Updated 14:31 IST
Zee Entertainment share gains 5% despite weak Q1 earnings; check what brokerages say
Stock price of Zee Entertainment Enterprises has jumped 13% in one week and 16% in one month

Zee Entertainment Enterprises share price jumped over 5% intraday in Wednesday's session after the company declared its April-June quarter numbers. Zee Entertainment Enterprises Ltd (ZEEL) on Tuesday reported 94.5% year-on-year (YoY) decline in consolidated net profit at Rs 29.3 crore for the first quarter ended June 30, 2020 against Rs 529.8 crore in the corresponding quarter last year.

Following the earning update, share price of Zee Entertainment Enterprises opened at Rs 630.90 and later climbed 5.2% to the intraday high of Rs 183 on BSE against the earlier close of Rs 173.95. The Zee Entertainment Enterprises stock earlier also touched an intraday low of Rs 169.35, falling 2.64%.

Stock price of Zee Entertainment Enterprises has jumped 13% in one week and 16% in one month. ZEEL shares trade higher than 5, 20, 50 and 100-day but lower than 200-day moving averages. Market capitalisation of the firm stood at Rs 17,364 crore as of today's session.

Shares of ZEE Entertainment closed Tuesday's trade at Rs 173.95, up 2.38% against the previous closing price of Rs 169.90 on the BSE, ahead of Q1 results.

Consolidated operating revenue tumbled by 34.7% to Rs 1,312 crore as against Rs 2,008.1 crore in the same quarter last year.

During the April-June quarter, EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) declined 66.7% to Rs 219.9 crore in Q1 FY21 from Rs 659.8 crore in Q1 FY20.

"Despite a sharp increase in viewership across mediums, monetisation was really weak in April-May leading to 66 per cent YoY decline in domestic advertising revenues," ZEEL said in a filing to the Bombay Stock Exchange.

Research and brokerage firm Motilal Oswal Financial Services maintained a neutral rating with a target of Rs 190 per share for ZEEL stock. The brokerage said," We continue to remain watchful of the evolving business situation and governance measures, including the admission of new board members over the next few months and increase in financial disclosures for investors."

CLSA retained ZEEL stock to 'buy' and raised its target price to Rs 255 per share and added that the company's Q1 revenue exceeded estimates, while ad revenue was in-line. CLSA added that improved disclosures, TV viewership jump & advisement growth are likely to return in H2 and that Zee Network viewership sharply improved to exceed pre-COVID levels.

Morgan Stanley also maintained an equal-weight rating and raised the target to Rs 150 and said," The advertisement & subscription revenue was mostly in line with our estimates, while the company's Q1 margin & earnings were weaker."

Macquarie in its report said," The market is under-appreciating steps taken by the company in the past 7 months to improve credibility. FY21-23E earnings per share (EPS) was up 3-5%, while it raised FY22E price-earnings ratio (PER) target multiple to 14x from 12x". The brokerage maintained 'outperform' on ZEEL stock with a target of Rs 250 per share.

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