Zee Entertainment shares decline over 5% after Q4 ad revenue dips by Zee5 turnaround continues

Shares of Zee Entertainment Enterprises Ltd. declined over 5% in early trade on Wednesday, May 20, after the company reported its fourth quarter earnings.

The company's change in movie-rights amortisation policy has driven the Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) loss for the fourth quarter. In addition, the core business profitability still remains weak as well.

Zee Entertainment said that its ad revenue was impacted in March because of the West Asia crisis. However, the turnaround of its Zee5 platform continued, with a second consecutive quarter of EBITDA profitability, and revenue increasing by 71% from last year.

Zee Entertainment changed its management estimates for consuming premiere movie nights to reflect the evolving monetization and digital consumption patterns across platforms. This led to accelerated amortisation of ₹408.6 crore.

Adjust for the same, its EBITDA declined to ₹139.8 crore, down 51% from last year

Its current tax inclusion credit of ₹97 crore is written off on Margo investment in FY26, which is now a fully-owned subsidiary. This cushioned the impact on its profit after tax (PAT).

CLSA Maintains Optimism

CLSA has an "outperform" call on the stock with a price target of ₹125 apiece, indicating an upside of 42.5% from its previous close.

The brokerage has cut its FY27-28 earnings estimates by up to 18%. Despite the cut in earnings estimates, CLSA maintained its optimism on the stock due to strong viewership and a healthy cash balance.

Of the 16 analysts who have coverage on the stock, 10 have a "buy" rating, two have a "hold" rating and four have a "sell" rating.

Shares of Zee Entertainment Enterprises declined 5.3% in early trade to ₹83 apiece on Wednesday. The stock has declined 8.3% this year, so far.

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