Buy Zee Entertainment Enterprises; target of Rs 101: Prabhudas Lilladher

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Zee Entertainment Enterprises (Z IN) reported weak operational performance with an EBITDA margin of 3.2% due to elevated programming and A&P spends on account of FIFA rights acquisition.
  • Excluding the impact of higher spends, EBITDA margin would have been in the mid-to-high single-digit range, indicating potential for recovery.
  • ZEE5's revenue doubled with an EBITDA margin of 6.6%, driven by healthy traction in digital business.
  • The company has secured international distribution rights for Drishyam 3: The Conclusion, expanding its reach to global markets.
  • Retention rate of subscribers who onboarded ZEE5 for FIFA 2026 is trending at 35-40%, aiding the subscription business.

Thesis Validation Checklist

  • Investors should watch for margin recovery from 2HFY27E, driven by normalization of A&P spends and healthy traction in digital business.
  • Subscription revenue growth and retention rates will be key indicators of the company's ability to sustain its digital business.
  • The ability to secure new content deals and expand its global reach will be crucial for long-term growth.
  • Investors should monitor the company's ability to manage content costs and A&P spends, as these will be key drivers of margin expansion.