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Should you buy, sell or hold ZEE after Q1 results? Here's what brokerages say

Should you buy, sell or hold ZEE after Q1 results? Here's what brokerages say

Should you buy, sell or hold ZEE after Q1 results? Here's what brokerages say
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By CNBCTV18.com Aug 9, 2021 12:41:51 PM IST (Published)

ZEE management told CNBC-TV18 that the slower ad revenue recovery impacted margins during Q1 and going ahead the margin will be lower than earlier guidance provided after Q4.

The share price of Zee Entertainment Enterprises (ZEEL) fell more than 3 percent in the early trade on Monday on lower margin guidance given in its earnings call for the quarter ended June 2021.

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The company posted a consolidated net profit of Rs 208.78 crore in Q1FY22, reporting a sharp jump from Rs 29.28 crore in the year-ago quarter. Revenue rose 35.3 percent to Rs 1,775 crore from Rs 1,312 crore, YoY.
During the quarter, revenue from advertisement was at Rs 926.61 crore as against Rs 421.06 crore and subscription revenue was at Rs 813.05 crore versus Rs 744.311 crore, YoY.
Speaking to CNBC-TV18, the company's management said that the slower ad revenue recovery impacted margins during the quarter and going ahead the margin will be lower than earlier guidance provided after Q4.
It reduced the margin guidance to 20–25 percent after revising it to 25–26 percent in the last quarter.
The Telecom Regulatory Authority of India (TRAI)'s New Tariff Order (NTO 2.0) was keeping prices lower, the company said. It expects some disruptions due to NTO2.0 for the next 2-3 quarters.
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Here's what brokerages have to say about ZEEL's stock and Q1 earnings:
CLSA
Zee Entertainment’s 1QFY22 consolidated revenues were ahead of estimates. The positive surprise was led by a 128 percent YoY jump in India advertising revenues despite the COVID second wave and lockdowns. Ebitda and PAT up 56 percent/59 percent YoY were also ahead, led by a revenue beat, CLSA said.
The brokerage retained FY22/23CL forecasts and reiterated a Buy rating and target price of Rs 306 per share.
UBS
Ad revenues have declined due to COVID-led slowdown, as per UBS. The margin guidance for FY22 is unlikely to be met, it said, adding that the weaker-than-expected recovery ahead and the likely impact of COVID 3.0 could create some downside risks to its estimates.
However, UBS has maintained a Buy call on the stock on attractive valuations and a target price of Rs 250.
Edelweiss
Edelweiss has a Buy rating and a target of Rs 343 on the stock. It expects strong advertisement revival to play out in favour of the company.
The company has good viewership across markets and strong underlying advertisement demand and its plan to focus across platforms is likely to deliver strong growth, Edelweiss said.
Motilal Oswal
The brokerage revised down EBITDA/PAT estimate by 12 percent for both FY22, FY23 for the second straight quarter.
It maintained a Neutral rating with a target price of Rs 215. per share.
At 11:35 am, the shares of ZEEL were trading flat at Rs 196.85 apiece on the BSE.
(Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.)
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