Television

Motilal Oswal reiterates 'buy' status for Zee

MUMBAI: Content with the bottomline figures of Zee in the first quarter of this fiscal, Motilal Oswal has retained 'buy' status for the scrip at a target of Rs 116. Zee is quoting at a Price to Earnings multiple (P/E) of 15.3 and EV/EBITDA of 10.3x.

According to a Motilal Oswal equity research report on Q1 performance,

Ad revenues have declined 20 per cent year on year (yoy) to Rs 1.1 billion on a comparative basis.

Subscription revenues have been robust; domestic pay revenues up 68 per cent yoy.

Balance sheet quality is improving consistently; debtors outstanding reduced to Rs 4.9 billion from Rs 5.6 billion in March 2003.

The report on the Zee financials says that given the promise of a pickup in ad revenues coupled with robust subscription revenue growth, there is enough reason to remain positive on Zee. The report also sounds off the company financials as healthy given the improving quality of their balance sheet.

Revenues and margins

The report echoes the general reaction in the market about revenues for the quarter being lower than expected due to a sharp decline in advertisement revenues. However despite the concern, the report sounds optimistic given the higher EBITDA margin.

As far as researchers at Motilal Oswal are concerned, Zee has delivered the expected profits.

However, the report expresses concern over low advertisement revenues of Rs 1.2 billion, which actually show a yoy de-growth of 13.4 per cent. Moreover, Q1 results include advertisement revenues of ETC Networks. To make the numbers comparable on a yoy basis, if the ETC revenues are deducted, actual advertisement revenues for the quarter would be in the vicinity of Rs 1.1 billion, which is a high yoy de-growth of 20 per cent.

The Zee management has waved off this decline as a one off situation and has attributed it to:

· The continued hangover of ICC World Cup in the month of April 2003.

· The new transparent rate card that Zee brought out in April 2003 took time to generate awareness and acceptance among the media buying community.

Nevertheless, the report gives a positive nod to the robust subscription revenues that are said to be ahead of market expectations. According to the report, growth has come in from all quarters - domestic pay, international pay and Siticable MSO.

The report expresses hope of a higher sequential growth in the domestic pay revenues from the second quarter onwards as that is when paid connectivity starts increasing at a faster pace. Domestic pay revenues at Rs 512 million for the first quarter this fiscal were have registered a yoy growth of 68 per cent and qoq growth of 2.2 per cent.

International pay revenues at Rs 618 million have also witnessed a qoq growth of 12.4 per cent. Each of the international markets has grown in terms of topline and bottomline with Zee adding 35,000 pay subscribers in the international markets in Q1FY04.

Siticable MSO operations, at Rs 298 million, have also registered a qoq growth of 16.9 per cent.

What really made the day on the declaration of Zee Q1 results was that the EBITDA margin expanded by 60 basis points to 31.1 per cent on the back of flat personnel expenses and lower-than-proportionate growth in overheads.

Programming, transmission and other direct expenses have grown 23.6 per cent, driven by a 9 per cent growth in programming costs while transmission costs remained flat.

Healthier balance sheet

Emphasising the consistently improving quality of the balance sheet, the report says that debtors outstanding have been reduced to Rs 4.9 billion in June 2003 from Rs 5.6 billion in March 2003. So have the debtor days, which have gone down to 152 at the end of Q1 from 171 in March 2003. The report estimates that the average debtor days are likely to improve to 120 days by March 2004.

Total debt has already been brought down by Rs 1.6 billion to Rs 5.8 billion in Q1FY04. Long term debt to the extent of Rs 746 million and working capital loans of Rs 814 million have been repaid during the quarter. The report expects another Rs 1 billion debt repayment in Q2FY04, which will bring the total outstanding debt down to Rs 4.8 billion.

Overview and fastforward

Over all, the Motilal Oswal research report gives a positive outlook on Zee.

The report puts the estimated advertisement revenues for this fiscal at Rs 6.4 billion which would be a yoy growth of 2.4 per cent.

Researchers at Motilal Oswal also seem to be optimistic on the note that Zee has already achieved 42 per cent of its annual advertisements revenue target by sewing up annual deals with advertisers as of July 2003.

As far as the domestic pay revenues are concerned, the researchers say that have factored in any possible loss of pay revenues on account of the honeymoon pricing during the four-month CAS implementation period. Their estimate for FY04 stands at Rs 2 billion.

Whereas advertisement revenues are expected to bounce back in Q2FY04 with stability in the overall advertising market and improved acceptance of the new rate card by media buyers, for international subscription revenues, they are projecting a growth of 15.3 per cent at an estimated year-end figure of Rs 2.6 billion.

Further, the net profit for the year is expected to grow at 23.6 per cent, which will be in the vicinity of Rs 3.1 billion. This translates into a healthy EPS of Rs 7.5.

Maintaining a healthy outlook on Zee, Motilal Oswal has retained its buy recommendation and is optimistic about Zee's overall performance in this fiscal.

Also read: Kotak Securities retains 'in-line' status on Zee

Latest Reads

http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2016/12/10/The-Bourne-Legacy.jpg?itok=bBiJiS4E
Third Kind, Bourne To Kill, Species III & Predestination to be shown on Movies Now 2

MUMBAI: We are arriving at the end of 2016 and to celebrate the year that has gone by, Movies Now 2 is set to sway its viewers with some swag and style. The channel has lined up a series of Hollywood movies filled with action, sci-fi and fantasy. Audience can witness some of the most amazing unique...

Television TV Channels English Entertainment
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2016/12/10/Ravi%20Shankar%20Prasad.jpg?itok=Ylk_C8Bk
Cashless villages 'Mumkin Hai' with new channel & Rs 5-cr campaign

MUMBAI: The government has launched 'DigiShala', a Doordarshan free DTH channel, to promote cashless transactions in India -- the first step in online payment education through the electronic media. The channel will be brought through GSAT15 (DD Direct DTH), 93.5 degree East, Receive frequency:...

Television TV Channels Terrestrial
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2016/12/10/Ravi-Ankam.jpg?itok=7xX9r-rW
V6 challenges suspension; BARC to place facts before court

MUMBAI: V6 News, from the stable of the Telugu channel popular across Telangana and Andhra Pradesh, also wants to challenge Broadcast Audience Research Council India (BARC India) after the latter suspended its ratings review for some weeks along with other two channels on 24 November, 2016.

Television TV Channels News Broadcasting
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2016/12/10/Awaaz-Se-Bada-Na-Koi.jpg?itok=mpG5iXSc
&TV's innovative affair with The Voice India S2

MUMBAI: Have you ever seen a promo of a new show on television which is actually a video but not a video. Confused? ZEEL’s year-old Hindi general entertainment channel &TV has come up with the unique campaign ‘Awaaz Se Bada Na Koi’ to promote the second season of 'The Voice.'

Television TV Channels GECs
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2016/12/10/KHATMAL-E-ISHQ.jpg?itok=ZbKRdoJt
SAB TV revenue grew nine-fold under Sony umbrella

NEW DELHI: Sab TV, which claims to be the country’s sole channel beaming only comedy series, claims to have grown its revenue nine times since it came under the Sony fold.

Television TV Channels GECs
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2016/12/10/Prashant-Chothani.jpg?itok=z79wKqCX
Travelxp to launch new Tamil channel; 4K feed before Feb

MUMBAI: Giving competition to Discovery Channel, Prashant Chothani-promoted travel and lifestyle channel, travelxp, is all set to take southern India by storm with the launch of its new channel in Tamil. The channel's soft launch is scheduled for 13 December. It's availability on various...

Television TV Channels Regional
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2016/12/09/farhan-arjit.jpg?itok=1WwGNibs
Flo Rida, Arijit Singh, Farhan to enthrall at Aamby Valley City

MUMBAI: Absolut Enchanted Valley Carnival (EVC), India’s largest multi genre, camping and music festival is back with its 4th Edition at Aamby Valley City, Lonavala between 17 & 18 December. The carnival like its previous editions will be a mix of international and home-grown artistes. This...

Television TV Channels Music and Youth
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2016/12/09/Haunting.jpg?itok=04TOpxwK
NBC-Universal buys 'paranormal' series from Bomanbridge

MUMBAI/ SINGAPORE: Bomanbridge Media, a Singapore-based content distribution and production agency, announced a series of paranormal series programme sales to NBC-Universal’s Syfy and Celestial.

Television Production House Fiction
http://www.indiantelevision.com/sites/drupal7.indiantelevision.co.in/files/styles/340x340/public/images/tv-images/2016/12/09/Dayanidhi-Maran-800x800.jpg?itok=89LDOdFX
Sun TV security clearance review sought; two channels' cancellation stayed

NEW DELHI: A review has been sought by the information and broadcasting ministry from the home ministry about security clearance to Sun TV Network Ltd in view of the amended guidelines of that ministry. Union minister M Venkaiah Naidu told the Parliament yesterday that no reply had been received so...

Television TV Channels Regional

Latest News

Load More

Sign up for our Newsletter

subscribe for latest stories