Motilal Oswal is bullish on Zee Entertainment has beneficial purchase score on the inventory with a goal worth of Rs 320 in its analysis report dated August 29, 2023.

Motilal Oswal’s analysis report on Zee Entertainment

The proposed merger between Zee Entertainment Enterprises India (ZEE) and Sony Pictures Networks India (SONY), which was not too long ago permitted by the NCLT, is anticipated to create a dominant participant within the media trade. A warfare chest of USD1.6b (capital infusion) and regular annual EBITDA era functionality of ~INR40-50b from the linear enterprise ought to allow the corporate to compete inside the high-growth digital phase and to fund its latest foray into the sports activities phase. Further, the corporate’s deep understanding of the Indian leisure market, higher bargaining energy, and talent to provide a robust line-up of content material ought to enable it to have a robust play inside the OTT area. We consider the present valuations don’t absolutely seize the mixed entity’s potential progress catalysts. While there was some stability in subscription income with the implementation of NTO 3.0, the persistent softness within the advert market and the corporate’s selections on content material funding can be the important thing elements to be careful for.

Outlook

We retain BUY on the inventory with a TP of INR320, valuing the corporate at 7x EV/EBITDA for the linear enterprise and 1x EV/gross sales for the OTT phase on FY25 estimates. It implies a 30x P/E a number of on FY25E for the standalone entity.

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Zee Entertainment – 30 -08 – 2023 – moti