Zee Entertainment's Execution Of Aspirational Goals Key To Re-Rating, Says PL Capital, Retaining 'Buy'

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PL Capital Report

Post the merger fall out with Sony, Zee Entertainment Enterprises Ltd. indulged in incessant cost optimization. In FY25, Zee’s content and employee cost was down 10.4% and 9.0% respectively while operating loss in ZEE5 almost halved leading to 390 bps expansion in Ebitda margin.

While this was commendable, true operating leverage benefit of cost optimization exercise was overshadowed by a weak adenvironment.

We expect back-ended recovery in ad-revenues as Q1 FY26 is a sports heavy quarter and Zee Anmol’s viewership would take some time to pick up as it has migrated back to FTA recently.

We expect sales CAGR of 7.5% over FY25- FY27E with 540 bps improvement in Ebitda margin led by narrowing losses in ZEE5.

Retain Buy on the stock with a target price of Rs 179 (15x FY27E EPS).

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