Morgan Stanley sees 29% annual revenue growth for Zee, valuation as attractive

NEW DELHI: JM Morgan Stanley (JMMS) feels that the valuation of Zee Telefilms, India's largest vertically integrated media and entertainment company, "looks attractive" in the Indian market context as well as the global media sector.

JMMS has also predicted that considering the strategy adopted by Zee, including its overseas presence and a huge library of programmes, the company's earnings are expected to grow 29 per cent annually over the next three years. The key driver will likely be the growth in subscription revenues in the domestic market that is expected to grow 43 per cent CAGR (compound aggregate growth rate) over the next three years.

In a report, dated early August and titled "Zee Telefilms: Down, But Definitely Not Out", JMMS, said: "The absence of any media company of comparable size and equally diversified business profile has led us to compare Zee with other Indian corporates of significant size, strong brand equity and high growth rates (this would give a flavour of the company's valuation in the Indian context)."

Zee Group chairman Subhash Chandra's company can bounce back anytime

The report goes on to add: "The valuation (of Zee) looks attractive compared with the large Indian corporates, with Zee trading at an 18 to 42 per cent discount on EV/E (enterprise value to EBIDTA) and P/E (price to earning) ratio for financial year 2003."

When JMMS research estimates took four Indian companies for comparison, it was found that Zee's 31 per cent earnings growth is one of the highest, second only to Ranbaxy (59 per cent). The other companies taken for comparison included Hindustan Lever, Infosys and Bharti.

Zee is India's largest vertically integrated media company with revenues of $ 220 million and a presence in film, music and education. It is a large producer and aggregator of Hindi programming with an extensive library. Zee is also one of the largest cable distributors in the country through its wholly owned subsidiary, Siti Cable, which services nearly 6.5 million cable homes and nationally enjoys 16.2 per cent market share.

Listing out the investment positives, the JMMS report, which also mentions that it does not provide individually tailored investment advise, states that since Zee's programme library is one of the largest in the country - according to the Zee management it comprises 30,000 hours of programmes and 3,000 movies - "multiple delivery" is highly profitable.

Revenues from recycled software comprised 5 to 10 per cent of the total revenue over the past three years, the report says, adding: "The company has been exploiting the library across various distribution channels to optimise revenue."

JMMS also feels that the regional bouquet of channels in the Zee stable is part of a good flanking strategy and the strong regional foray not only enables the company to command higher viewership, but also enables it to offer advertisers focussed solutions to their advertising needs.

Zee's revenue of Rs. 2.05 billion in financial year 2002 from offshore subscribers comprised pay revenues and could "grow 19 per cent over the next three years by our estimates," the Morgan Stanley report points out.

Programming improvisation may unlock the TRPs for Zee Group broadcasting CEO Sandeep Goyal

The JMMS report, of course, lists out investment concerns too and since believes in presenting both sides of the saga, here's the flip side of the story. JMMS has noted that concerns include loss of viewership by Zee, current slowdown in ad market growth, need for improvisation in programming, high receivable days, some methods of accounting, attrition in top management and weak corporate governance in the past.

Pointing out that due to a slowdown in the growth of the overall ad market, Zee's ad revenues too, for the first time in the past decade, had declined 7.5 per cent in the FY 2002, the report optimistically points out a slow and gradual recovery in ad revenue over the next two-three years is expected. But Zee has to watch out for the cricket World Cup next year where the matches are expected to "clash with prime time shows."

The report also admits that Zee has ceded leadership to Star (which has managed to capture the eyeballs through blockbusters KBC, Kyunki and Kahaani) and adds: "We believe that Star, Sony and Zee will likely dominate and command 75-80 per cent of the ad market (with) Zee's share to stabilise at 25-30 per cent."


Latest Reads
BIG Magic acquires 'Boonie Bears' exclusive FTA rights

BIG Magic has acquired exclusive FTA rights of ‘Boonie Bears’, the No.1 and most popular animated series in China. BIG Magic has renamed it ‘Babloo Dabloo’ for the Hindi viewing audience. Babloo Dabloo airs every Monday – Sunday 10 am – 11 am & 5 pm – 6 pm only on BIG Magic

Television TV Channels GECs
PBL: Setting stage for next big thing on Indian sporting landscape

India has witnessed the emergence of a multi-sports culture over the past few years. This significant development has come on the back of a promising display by Indian sportspersons across various disciplines, the meteoric rise of home grown leagues and the consequent widening of the fan base of...

Television TV Channels Sports
CNNMoney new section will be about the fastest growing economy; MoneyStream app launched

MUMBAI: Attracting 1.8 million average monthly page views, witnessing a 37 per cent growth in video consumption and 16 per cent in unique browsers month-on-month from India in less than a year’s time is not smooth. In its ambitious plan of global expansion, CNN Digital is leaving no stone unturned...

Television TV Channels News Broadcasting
Content a 'Game of Thrones'; AT&T's control over HBO, Cartoon Network, Warner Bros faces regulatory lens

The global media landscape is resulting in a new juggernaut as an internet and cable behemoth yesterday purchased an entertainment conglomerate making the former unmatched in its size and reach to consumers through home broadband, smartphones, satellite television and a battery of movies and cable...

Television TV Channels English Entertainment
US$ 4.5 bn expected from IPL rights; SC recommends accounts scrutiny

The Supreme Court on Friday froze all financial transactions between the BCCI and state cricket associations by directing the apex body not to disburse any funds till it resolves to abide by the Justice RM Lodha panel recommendations on reforms by 3 December . The top court ordered that none of...

Television TV Channels Sports
TVS Tyres is co-presenter for Asian Champions Trophy 2016

Continuing its strong connect with sports, TVS Tyres has associated with Asian Champions Trophy 2016 by becoming the co-presenter. The Asian Champions Trophy is one of the premier hockey tournaments, a much sought after annual international competition promising some great hockey action. This...

Television TV Channels Sports
Q2-17: Zee Learn declares maiden interim dividend

The board of directors of the Essel group’s education company Zee Learn Limited (ZLL) have declared a first time ever dividend of 5 percent per equity share of Re 1 each for the quarter ended 30 September 2016 (Q2-17, current quarter).

Television TV Channels Factual & Documentary
Whether BARC action can stop unethical practices?

MUMBAI: Can businesses and industries practise their art of selling fairly although they have 'Fair Practices' training during academic courses, workshops and several ISO and other certifications? There seems to be the fear of the lawman, and not the law in India. If the traffic cop is watching,...

Television TV Channels Viewership
TV Superhighway: beIN, Yaddo, AfricaXP have joined us, says Magine CEO Ambuj Goyal

CANNES; Magine has secured partnerships with four of the industry’s most exciting sports, documentary and entertainment content providers. Partnerships with beIN, the international media group and owner of MIRAMAX; Yaddo, the new documentary streaming service headed up by former head of The BBC’s...

Television TV Channels Factual & Documentary

Latest News

Load More

Sign up for our Newsletter

subscribe for latest stories