A fall in network share for two straight quarters, headwinds for advertisers and a lack of clarity on NTO 2.0 are some of the concerns for the media firm, which reported a 33 per cent slide in consolidated net profit at Rs 181.93 crore for the March quarter compared with Rs 272.36 crore in the year-ago.
Total income for the quarter rose to Rs 2,361.17 crore from Rs 1,984.39 crore. Analysts said revenues were boosted by movie production revenues, as advertising revenues were flat YoY due to weak advertisers’ spending amid a sharp rise in inflation and higher input costs.
Ad revenues were also hit post-pull-out of FTA channels from DD Free Dish.
Securities said ZEE is facing a double blow of weak revenue outlook hit by macro challenges and elevated operating costs led by amplified content investments.
Any delay in progress on the Sony deal completion that can potentially change ZEE’s course will weigh on the stock more than the near-term trend in earnings, it said while suggesting a target of Rs 400, which suggests up to 68 per cent potential upside for the stock.
“Although ZEE launched more than 90 new shows in FY22, its network share was down by 20 bps sequentially to 17.1 per cent – a second-consecutive quarter of decline. Some industry participants have removed channels from free Dish, which should impact ad revenues in the near term,” said .
This brokerage has cut its FY23EPS forecast by 8.9 per cent and FY24 by 10.7 per cent, given the delay in market share recovery, headwinds for advertisers, lack of clarity on NTO 2.0 and higher investments. It sees the stock at Rs 310.
ZEE’s viewership share in the Hindi, Marathi & Tamil markets has been weak for a year and recouping market share losses has been an uphill task despite higher investments, said
.
“With TRAI’s consultation on NTO 2.0 in progress, we build in weak subscription revenue in 1HFY23, followed by gradual recovery. A combination of weak revenue, high content costs and elevated working capital leads to EPS cut,” IIFL said while suggesting a 12-month target of Rs 286 for the stock.
Processes for the Sony merger deal are on track, and the company is awaiting approvals from exchanges, after which an application to the NCLT will be made.
Given ad revenues are facing the heat from steep inflation,
has cut its FY23 EPS estimate by 3.2 per cent. It still has a target of Rs 420 on the stock, which suggests a potential 77 per cent upside.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own.
These do not represent the views of Economic Times)
