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Anand Rathi
Zee Entertainment (Buy)
Target: ₹220
CMP: ₹201.5
Pulled down by a 65 per cent y-o-y fall in ad revenue to ₹421 crore largely due to the pandemic and market-share loss in certain markets, Zee Entertainment’s revenue plunged 34.7 per cent y-o-y to ₹1,312 crore. Its subscription revenue grew 5 per cent y-o-y to ₹744 crore.
No fresh episodes of existing shows were produced in the first two months, leading to a drop in programming cost. This was partially offset by content shot at homes and purchase of licensed content for the linear and digital businesses. Besides, amortisation cost of movies and digital shows continues.
Key positives: Board members with expertise in law, media or finance to be inducted during FY21; Key financial policies have been re-drafted according to shareholder feedback; quarterly balance sheet disclosures; Broad break-up of inventory + content advances; and Key financials and select operating parameters of Zee 5. Another material development is the resignation of Subhash Chandra and the appointment of R Gopalan, an independent director.
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