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Zee Entertainment Enterprises Ltd., incorporated in the year 1982, is a Large Cap company (having a market cap of Rs 14369.15 Crore) operating in Media & Entertainment sector.
Financials
For the quarter ended 31-03-2020, the company reported a Consolidated sales of Rs 1951.08 Crore, down -4.76 % from last quarter Sales of Rs 2048.65 Crore and down -3.38 % from last year same quarter Sales of Rs 2019.27 Crore Company reported net profit after tax of Rs -762.52 Crore in latest quarter.
Investment Rationale
The brokerage said that Zee 4.0 strategy comes with a focus on improving various aspects of the business after creating discomfort on the balance sheet with capital allocation risk (investment in SugarBox), investment write-offs and a lack of clarity on the recovery of Rs7bn of subscription revenues from Dish TV and Siti Networks, and sustained increase in inventories. There is still the risk of provisions/write-offs on delayed subscription payments and auditor qualification for ~Rs3.9bn. In addition to these factors, there should be sustained cash burn in Zee5 as monetization would be gradual in the current hyper-competitive scenario. The brokerage continues to highlight structural challenges for traditional broadcasters with the possibility of increased FTTH penetration amid Jio’s aggressive efforts and changing content consumption habits of urban consumers. Additionally, there is still lack of clarity on ad revenue recovery in near term. Valuations can further deteriorate if management fails to deliver on FCF generation. Key upside risks include significant improvement in cash generation and overall balance sheet; quicker-than-estimated ad recovery; and sustained double-digit subscription revenue growth.
Promoter/FII Holdings
Promoters held 4.8 per cent stake in the company as of June 30, 2020, while FIIs held 67.3 per cent, DIIs 9.7 per cent and public and others 18.2 per cent.
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