X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Zee: Steadfast progress - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Apr 28, 2003

    Zee: Steadfast progress

    Zee Telefilms, the country's largest private sector media major, has posted a 17% rise in net profit and a 11% increase in revenues for the full year ended March 2003. Despite a sharp fall in other revenues i.e. education and the like, the robustness in subscription receipts has benefited the company significantly.

    Zee Telefilms (Consolidated)
    (Rs m) 4QFY02 4QFY03 Change FY02 FY03 Change
    Sales 3,158 3,685 16.7% 10,762 11,993 11.4%
    Other Income 230 238 3.5% 792 773 -2.4%
    Expenditure 2,426 2,488 2.5% 7,720 8,158 5.7%
    Operating Profit (EBDIT) 732 1,197 63.5% 3,042 3,836 26.1%
    Operating Profit Margin (%) 23.2% 32.5%   28.3% 32.0%  
    Interest 164 155 -5.3% 808 764 -5.4%
    Depreciation 74 95 29.8% 215 303 41.0%
    Profit before Tax 725 1,185 63.4% 2,812 3,541 26.0%
    Extraordinary items - (386) - - (386) -
    Tax 197 259 31.8% 866 885 2.2%
    Profit after Tax/(Loss) 528 539 2.1% 1,946 2,270 16.7%
    Net profit margin (%) 16.7% 14.6%   18.1% 18.9%  
    No. of Shares (m) 412.5 412.5   412.5 412.5  
    Diluted Earnings per share (Rs)* 5.1 5.2   4.7 5.5  
    P/E (x)         12.7  
    *(annualised)            

    Zee TV is largely dependent on advertising and subscription based revenues for growth (98% of consolidated topline in FY03). Revenue growth in 4QFY03 is on the higher side compared to last three quarters in FY03. Just to put things in perspective, consolidated revenue growth in 1QFY03, 2QFY03 and 3QFY03 was 7%, 11% and 10% respectively. The fillip in March quarter topline not only came from a 76% rise in access revenues but also from the rise in broadcasting revenues. That said, this includes revenues from Padmalaya Telefilms that was merged into the company in September 2002 and ETC Networks. As expected, income from advertising fell by 16% in 4QFY03 (down 5% in FY03) in light of the cricket world cup that was broadcasted by Sony TV.

    Consolidated revenue mix…
    (Rs m) 4QFY02 4QFY03 Change FY02 FY03 Change
    Content & broadcasting 2,712 3,207 18.3% 9,220 10,373 12.5%
    PBIT margin (%) 29.0% 35.1%   33.6% 35.6%  
    Access 319 563 76.3% 1,303 1,823 39.9%
    PBIT margin (%) -30.7% -15.1%   -9.1% -4.6%  
    Education 34 51 49.9% 274 163 -40.3%
    PBIT margin (%) -169.1% 112.3%   -64.7% -47.8%  
    Others 237 2 -99.3% 237 38 -84.2%
    PBIT margin (%) 11.4% 106.3%   11.4% 6.6%  
    Total 3,303 3,823 15.7% 11,034 12,397 12.4%
    PBIT margin (%) 19.9% 28.8%   25.6% 28.5%  

    Operating margins have also shown a marked improvement during 4QFY03 and FY03, as Zee TV continued to reap benefits from higher subscription based income. Overall subscription revenues, including domestic and international businesses, registered an increase of 54% in 4QFY03. Incremental revenues tend to add directly to the company's profitability. This was further augmented by the hike in charges by Zee Turner in January 2003. Moreover, Zee has reduced its workforce by 350 in FY03, which has resulted in employee related costs falling from 9% of total expenses in 4QFY02 to 8% in the recent quarter.

    Though consolidated interest costs fell by 5% in FY03, higher charges towards depreciation and extraordinary items pertaining to write off of previous years have lowered growth in consolidated net profits. Excluding the impact of the same, net profit growth is actually at 37% in FY03.

    The stock is currently trading at Rs 70 implying a P/E multiple of 12.7x FY03 earnings (12x FY04E earnings). While the results are in line with 'The Quantum View' estimates for FY03, we expect weakness in advertising revenues to continue in FY04 as well. This is not only because of the slowdown in the economy that has forced major players like Colgate and Hindustan Lever to curtail adspend, but also due to the fact that Zee is yet to get its act right on the programming front. But the company expects advertising revenues to grow at 12%-15% over the next three years.

    On the subscriptions front, it is a well-known fact that the deadline for the implementation of the conditional access based regime (CAS) for the four metros has been finalised as July 14th. We expect this transition to benefit over the long run. As against just 10% of subscription revenues, broadcaster will then have a larger chunk of monthly cable subscriptions post the CAS. Zee has announced its pay bouquet cost at Rs 55 in the CAS environment. The pay bouquet would comprise 15 channels including 11 channels of Zee, two channels of Turner (CNN, Cartoon Network), CNBC and Reality TV channel. Overall, we have factored in a conservative growth in advertisement revenues and a strong growth in access charges. Amidst positives, higher debtor days (155 in FY03), large sums due from the promoter group and poor track record increases the risk profile of the stock from a retail investor's perspective.

     

     

    Equitymaster requests your view! Post a comment on "Zee: Steadfast progress". Click here!

      
     

    More Views on News

    Zee Ent: GST Short term Negative but Long term Positive (Quarterly Results Update - Detailed)

    Aug 14, 2017

    The management believes that GST will aid the advertising spends in the long-run.

    GTPL Hathway Ltd. (IPO)

    Jun 21, 2017

    Should one subscribe to the IPO of GTPL Hathway Ltd?

    S Chand and Company Ltd. (IPO)

    Apr 26, 2017

    Should you subscribe to the IPO of S Chand and Company Limited?

    Zee Ent: Advertising drives revenues (Quarterly Results Update - Detailed)

    Aug 1, 2016

    Zee Entertainment has announced its results for the first quarter of the financial year 2016-17 (1QFY17). The company has reported 18.5% YoY growth in sales and a 13.7% YoY growth in profit after tax.

    Zee Ent: Operating Margins Continue Expansion (Quarterly Results Update - Detailed)

    Jun 9, 2016

    Zee Entertainment has announced its results for the fourth quarter of the financial year 2015-16 (4QFY16). The company has reported 14% YoY growth in sales and a 13% YoY growth in profit after tax.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    ZEE ENTERTAINMENT SHARE PRICE


    Aug 22, 2017 (Close)

    TRACK ZEE ENTERTAINMENT

    • Track your investment in ZEE ENTERTAINMENT with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    MORE ON ZEE ENTERTAINMENT

    ZEE ENTERTAINMENT 8-QTR ANALYSIS

    Detailed Quarterly Results With Charts

    COMPARE ZEE ENTERTAINMENT WITH

    MARKET STATS