Zeel Entertainment Aspires for Industry-Leading EBITDA

The stock of Zee Entertainment Enterprises Ltd (ZEEL) was seen buzzing on the bourses on Tuesday. The shares jumped about 4.8% and ended near the day’s high. However, the year 2024, up until the first half of May, had not been kind to ZEEL, with the stock price plummeting more than 40%. Yet, a recent upswing has seen the stock rise by almost 10% over the last three trading sessions.

So, the question arises: Are good days ahead for ZEEL?

What Went Wrong for ZEEL?

Before delving into the future prospects of ZEEL, it’s crucial to understand what led to the stock’s steep decline. Earlier this year, Sony called off its merger with the Indian media conglomerate. Sony stated that the merger conditions had not been met, primarily due to significant leadership conflicts involving Punit Goenka. SEBI’s investigation into Goenka and his father for misuse of company funds further complicated the situation. Sony preferred a leader without legal baggage, but Zee’s proposed alternatives were unacceptable to Sony.

A Silver Lining in the Storm

As the saying goes, “Every storm runs out of rain.” ZEEL experienced a turnaround in the recently announced Q4FY24 results, reporting a net profit of Rs 13 crore compared to a loss of Rs 196 crore in the same quarter of FY23. Revenue grew by 2.74% year-on-year to Rs 2,170 crore for Q4FY24.

Financial Recovery and Future Prospects

In the fourth quarter of FY24, domestic advertising revenue grew 10.6% year-on-year, driven by a recovering macro advertising environment and increased spending by FMCG clients. Subscription revenue growth was bolstered by a rise in linear subscriptions. Total expenses in the fourth quarter were lower at Rs 2,043.76 crore compared to Rs 2,083.35 crore in the year-ago period.

For FY24, consolidated net profit stood at Rs 141.43 crore, up from Rs 47.79 crore in FY23. Consolidated total income for FY24 was Rs 8,766.48 crore, compared to Rs 8,167.62 crore in FY23. ZEEL attributed FY24 revenue growth to subscription revenue and other sales and services. The company aspires to deliver an industry-leading 18-20% EBITDA margin.

Zee Music Company’s Success

Zee Music Company has become the second-largest music label, boasting 149 million subscribers on YouTube. During the year, Zee Music added 15.8 million subscribers, thanks to new acquisitions and an expanding catalogue.

Conclusion

The tide appears to be turning in favor of ZEEL, but the journey ahead may come with some bumps. Close monitoring is essential as ZEEL navigates this challenging path.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.