Prabhudas Lilladher Maintains Buy Rating on Zee Entertainment Enterprises, Sees Target Price of Rs 91
Zee Entertainment Enterprises Downgraded to Accumulate by Prabhudas Lilladher
Prabhudas Lilladher has released a research report on Zee Entertainment Enterprises, downgrading its rating to Accumulate from BUY and revising its target price to Rs91. The downgrade is based on a refinement of the company's domestic ad-revenue growth forecast and operating cost assumptions, following a change in movie amortization policy.
The change in movie amortization policy led to an accelerated charge of INR4,084mn, resulting in an EBITDA loss of INR2,686mn in the latest quarter. This is a significant departure from the expected EBITDA profit of INR2,219mn and INR2,183mn in previous estimates. Despite this, ad-revenues showed some signs of recovery, with growth hovering around the low single-digit mark, adjusting for the crisis-ridden March quarter.
Key Estimates and Projections
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| Estimate | FY26E | FY27E | FY28E |
|---|---|---|---|
| Revenue CAGR | - | 4.0% | 4.0% |
| EBITDA Margin | - | 12.9% | 14.4% |
| Target Price (TP) | - | - | Rs91 (10x FY28E EPS) |
The research report also projects a revenue CAGR of 4.0% over FY26-FY28E, with EBITDA margins of 12.9% and 14.4% in FY27E and FY28E, respectively. Zee Entertainment Enterprises trades at 11x/9x its FY27E/FY28E EPS.
Investor Takeaway
Downgrade to ACCUMULATE with a target price of Rs91.
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