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Shares of Zee Entertainment Enterprises Ltd. are trading nearly 4% lower on Friday, October 17, reacting to the firm's September quarter results, which it announced on Thursday.
Citi, UBS, and CLSA have maintained a subdued outlook on Zee Entertainment’s stock following its September quarter results.
Citi has a “sell” rating on Zee Entertainment, with a target price of ₹100 per share. This implies a potential downside of about 8.5% from its previous close of ₹109.3. The brokerage noted that Zee delivered another weak quarterly performance, with consolidated revenue falling 2% year-on-year. The decline was largely driven by persistent softness in advertising revenue, which dropped 11% during the quarter.
Citi said a significant concern during the quarter was the sharp decline in profitability, with the EBITDA margin contracting by 510 basis points sequentially to 7.4%. The drop was mainly driven by higher strategic spending, including the launch of new channels and increased advertising expenses. Although these investments are expected to deliver long-term benefits, Citi noted that their positive impact on revenue growth is likely to come with a lag.
Citi also mentioned bright spots in the quarter: Improvement in viewership share to 17.8%, up 100 basis points sequentially. Digital business performance — Zee5 revenue grew 32% from the previous year and EBITDA loss narrowed to 30 crore.
UBS has a "neutral" rating on the stock with a target price of ₹140 per share, a potential upside of 28% from its previous close. The brokerage said the company reported a soft second quarter.
It highlighted the management's commentary in its note, saying they are 'cautiously optimistic' about ad revenue growth in the second half of FY26 by positive impact from festive season spending and improved channel ratings.
It said the management is looking at improvement in margins in the second half as revenues increase and the current cost bump up is not expected to continue in the upcoming ones.
Zee5 breakeven within FY26 remains a priority for the management, it said.
CLSA has an "outperform" rating on the stock, but cut its target price by 15.3% from ₹157 apiece to ₹133 per share, which is still a 21.7% upside from its previous close.
It said the company's second quarter consolidated revenue of ₹1,970 crore declined 2% from the previous year and 8% sequentially. It was also 1% below estimates. This was due to the 11% decline in advertising revenue from the previous year, even though it was up 6% sequentially.
With a jump in content cost, Zee's EBITDA margin was down 5 basis points sequentially and EBITDA declined 54% from the previous year and 36% from the previous quarter, it said. The company's profit after tax of 76.5 crore was down 63% from last year and 47% from the previous quarter.
CLSA cut its FY26-28 forecasts for the stock after the disappointing quarter, it said.
However, with Zee Network's growing viewership, continued OTT/Zee5 ramp-up and festive season, it believes ad growth is ahead.
It said cash on balance sheet is high at ₹2,100 crore and the stock is trading at 10 times its price-to-earnings ratio, CLSA said.
Zee Entertainment shares were down 3.7% at ₹105.3 apiece around 11.40 am on Friday. The stock has declined 14.4% this year, so far.
Also Read: Anupam Rasayan Q2 Results: Firm reports profit at ₹44 crore, margins narrow
Citi, UBS, and CLSA have maintained a subdued outlook on Zee Entertainment’s stock following its September quarter results.
Citi
Citi has a “sell” rating on Zee Entertainment, with a target price of ₹100 per share. This implies a potential downside of about 8.5% from its previous close of ₹109.3. The brokerage noted that Zee delivered another weak quarterly performance, with consolidated revenue falling 2% year-on-year. The decline was largely driven by persistent softness in advertising revenue, which dropped 11% during the quarter.
Citi said a significant concern during the quarter was the sharp decline in profitability, with the EBITDA margin contracting by 510 basis points sequentially to 7.4%. The drop was mainly driven by higher strategic spending, including the launch of new channels and increased advertising expenses. Although these investments are expected to deliver long-term benefits, Citi noted that their positive impact on revenue growth is likely to come with a lag.
Citi also mentioned bright spots in the quarter: Improvement in viewership share to 17.8%, up 100 basis points sequentially. Digital business performance — Zee5 revenue grew 32% from the previous year and EBITDA loss narrowed to 30 crore.
UBS
UBS has a "neutral" rating on the stock with a target price of ₹140 per share, a potential upside of 28% from its previous close. The brokerage said the company reported a soft second quarter.
It highlighted the management's commentary in its note, saying they are 'cautiously optimistic' about ad revenue growth in the second half of FY26 by positive impact from festive season spending and improved channel ratings.
It said the management is looking at improvement in margins in the second half as revenues increase and the current cost bump up is not expected to continue in the upcoming ones.
Zee5 breakeven within FY26 remains a priority for the management, it said.
CLSA
CLSA has an "outperform" rating on the stock, but cut its target price by 15.3% from ₹157 apiece to ₹133 per share, which is still a 21.7% upside from its previous close.
It said the company's second quarter consolidated revenue of ₹1,970 crore declined 2% from the previous year and 8% sequentially. It was also 1% below estimates. This was due to the 11% decline in advertising revenue from the previous year, even though it was up 6% sequentially.
With a jump in content cost, Zee's EBITDA margin was down 5 basis points sequentially and EBITDA declined 54% from the previous year and 36% from the previous quarter, it said. The company's profit after tax of 76.5 crore was down 63% from last year and 47% from the previous quarter.
CLSA cut its FY26-28 forecasts for the stock after the disappointing quarter, it said.
However, with Zee Network's growing viewership, continued OTT/Zee5 ramp-up and festive season, it believes ad growth is ahead.
It said cash on balance sheet is high at ₹2,100 crore and the stock is trading at 10 times its price-to-earnings ratio, CLSA said.
Zee Entertainment shares were down 3.7% at ₹105.3 apiece around 11.40 am on Friday. The stock has declined 14.4% this year, so far.
Also Read: Anupam Rasayan Q2 Results: Firm reports profit at ₹44 crore, margins narrow
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