zee entertainment enterprises ltd - q2fy12 result update

8/3/2019 Zee Entertainment Enterprises Ltd - Q2FY12 Result Update

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Wealth Research, Unicon Financial Intermediaries Pvt Ltd.

Email: [email protected]

NG TERM INVESTMENT CALL

Accumulate19 October 2011

Company Report | Q2FY12 Result Update

Q2FY12 Result Highlights

The ZEEL numbers were little disappointing, in the advertisement front

with 4% decrease in advertisement revenue on YoY basis from INR

4121.5 mn to INR 3949.3 mn. Subscription revenue registered a growth

of ~6% to INR 2910.4 mn from INR 2736.8 mn on YoY basis. Other sales

and services registered a growth of 26% on YoY basis. However, the

company registered a higher EBITDA margin of 28.9% from 26.5% in

2QFY11 driven by lower sport cost. The company registered of growth

of 23.6% in bottom line driven by lower tax rate and other income. The

subscription revenue and expenditure for Q2 FY2012 are not

comparable to those for Q2 FY2011 because of the change in accounting

treatment of domestic subscription revenues, which are now beingreported net of expenses.

The advertising revenue registered a growth of ~4% on QoQ basis,

which was below our expectations. While the non-sports business

registered a modest growth in of low single digit. Sports revenue

was also lower as there was some India-centric cricket properties

showcased in 2QFY11.

On subscription front, revenues are not comparable as they are being reported as net of expenses basis. The accounting treatment

was changed after the formation of Media Pro - a Joint venture

between Star and ZEEL, which pays subscription revenues on net of

expenses basis. Subscription revenues from international operations

were down 3% on YoY basis.

The sports business registered a loss of INR 1.1 bn as compared to a

loss of INR 1.7 mn in 2QFY11. The company reported a revenue INR

881 mn in the 2QFY12 as compared to INR 1.1 bn in 2QFY11.

Outlook & Valuation

The management has guided a sluggish advertisement growth for the

H2FY12. In addition lower rating in its flagships channel Zee Tv can put

pressure on the ad yields. Moreover, the company is increasing original

weekly programming hours from 28hr to 29hr which can put pressure

on the margins going forward. At the CMP the stock is trading at 18x

and 15x for FY11E and FY12E. We maintain Accumulate on the stock

with price objective of 128. The company is running a buy back programat a maximum price of INR 126 till March 2012, which is expected to act

as a support for the price.

Industry Media

CMP (INR) 113Target (INR) 128

52 week High/Low (INR) 300/106

Market Cap (INR BN) 110.5

3M Avg. Daily Volumes (000) 2083.7

P/E (FY12e) 18x

Shareholding Pattern (%)

Stock Performance

Performance (%)

1 Month 3 Months 1 Year

ZEEL -1.1% -9.9% -17.3%

NIFTY -0.9% -8.8% -17.1%

* Source: Bloomberg, Unicon Research


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Financials(INR in mn)

Q2FY12 Q2FY11 Y-o-Y Q1FY12 Q-o-Q

Net Revenue 7183.8 7115.7 1.0 6983.0 2.9

Operating Exp. 5108.3 5230.4 -2.3 5422.6 -5.8

EBITDA 2075.5 1885.3 10.1 1560.4 33.0

EBITDA (%) 28.9 26.5 240 bps 22.3 655 bps

Depreciation 78.2 56.3 38.9 89 -11.8

Other Income 279.3 239.7 16.5 255 9.7

EBIT 2276.6 2068.7 10.0 1726.2 31.9

EBIT (%) 31.7 29.1 9 bps 24.7 28 bps

Interest 55.7 4.7 1085.1 30 83.2

PBT 2220.9 2064.0 7.6 1695.8 31.0

Tax Provision 621.2 801.0 -22.4 394.20 57.6

Tax Rate (%) 28.0 38.8 -27.9 23.2 20.3

PAT 1599.7 1263.0 26.7 1301.6 22.9

Minority interest 39.7 0.6 6516.7 -35.20 -212.8

Reported PAT 1560.0 1262.4 23.6 1336.8 16.7

Reported PAT (%) 21.7 17.7 22 bps 19.1 13 bps

Source: Company, Unicon Research*Consolidated


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Unicon Investment Ranking Methodology

Rating Buy Accumulate Hold Reduce Sell

Return Range >= 20% 10% to 20% -10% to 10% -10% to -20%

zee entertainment enterprises ltd - q2fy12 result update

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