Kotak Securities

Zee Entertainment (Sell)

CMP: ₹538.65

Target: ₹506

Zee Entertainment Enterprises is a media and entertainment company engaged in providing broadcasting services. The company operates through Content and Broadcasting segments. It offers content in multiple languages and offers approximately 38 international and over 30 domestic channels. The company has a library.

Zee Entertainment has reported in-line operating financials for Q1FY18. Results were on expected lines, affected adversely by GST roll-out.

Weakness in advertising revenues is likely to spill over to an extent into Q2 FY18 as well. Recent improvement in the ratings of flagship channel Zee TV has led to an appreciation in the stock — we raise our price target to ₹506 (₹470 earlier) in recognition of this.

We note that there is significant likelihood of fresh pressure emerging on ratings (fresh programming initiatives from Colors, Sony); uncertainties relating to the implementation of tariff order persist. Maintain ‘Sell’.