Centrum's research report on Zee Entertainment
We maintain our BUY rating on Zee Entertainment Enterprises Ltd. (ZEEL) with a revised target price of Rs651. We believe there is upside risk to our ad growth expectation of 16% for FY19E on the back of strong market share gains across languages and increasing ad spends by FMCG companies. Further we believe the full impact of the TRAI tariff order would be in FY20 and the management is confident to deliver low teens growth on the back of ARPU increase. New channel launches would help the company complete its bouquet of languages and help in increasing ad inventory. Management strategy to do deals for ZEE5 with telecos only on favourable terms is healthy for long term while we believe the international launch by end of FY19 would be an added positive. We believe increase in ZEE5 originals and to premier movies on ZEE5 would help the company generate significant subscribers over medium term.
Outlook
We maintain our BUY rating and value the stock on Adj OCF/EV yield on 5 year avg cash flow and arrive at a TP of Rs651. Downside risk being uncertainty in implementation of Tariff Order and rollout of ZEE5.
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Read More First Published on Jul 20, 2018 05:19 pm
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