Buy Zee Entertainment, target price Rs 410: Motilal Oswal Retail Research

Motilal Oswal Retail Research has buy call on Zee Entertainment Enterprises with a target price of Rs 410.

Zee Entertainment Enterprises, incorporated in the year 1982, is a Large Cap company (having a market cap of Rs 28152.72 crore) operating in Media & Entertainment sector.

Investment Rationale
As per media sources, Invesco is withdrawing its requisition notice, seeking removal of MD & CEO Punit Goenka from the board of ZEE. This comes as a big positive given Invesco being the largest shareholder (18%), thus strengthening the merger. ZEE5 business witnessed healthy subscriber growth, with improved DAU/MAU and average time on the back of improved content and user experience.


The series of new content launches and investment in OTT should improve its network market share and sustain better ZEE5 KPIs. Its content pipeline remains strong.

With the certainty of the merger being higher given Invesco’s support and recovery in the ad market, the stock can potentially see a re-rating in its valuation. Motilal Oswal Retail Research values ZEE at 25x FY24E EPS and maintain our Buy rating.

Financials
For the quarter ended 31-12-2021, the company has reported a Consolidated Total Income of Rs 2130.44 crore, up 5.97% from last quarter Total Income of Rs 2010.47 crore and down -22.72% from last year same quarter Total Income of Rs 2756.93 crore. Company has reported net profit after tax of Rs 298.91 crore in latest quarter.

Promoter/FII Holdings
Promoters held 3.99% stake in the company as of 31 Dec-2021, while FIIs owned 52.21%, DIIs 20.86%.