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: Ready for takeoff? - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Apr 30, 2002

    Zee: Ready for takeoff?

    With increasing competition from Star and Sony, Zee has been facing one of the toughest times. This is reflected from a flat revenue growth on a consolidated basis for the fourth quarter (down from a 10% growth recorded in 3QFY02). On a standalone basis Zee's revenues dropped by 12%. A 95% jump in earnings for the fourth quarter was contributed by a sharp improvement in operating margins, lower interest and depreciation cost.

    Zee Telefilms (Consolidated)
    Rs m) 4QFY01 4QFY02 Change FY01 FY02 Change
    Sales 2,975 3,008 1.1% 9,763 10,612 8.7%
    Other Income 217.1 235.1 8.3% 596.8 796.9 33.5%
    Expenditure 2,419 2,098 -13.2% 7,266 7,392 1.7%
    Operating Profit (EBDIT) 557 910 63.4% 2,498 3,220 28.9%
    Operating Profit Margin (%) 18.7% 30.2%   25.6% 30.3%  
    Interest 345.4 291.6 -15.6% 703.1 935.7 33.1%
    Depreciation 76.4 53.4 -30.1% 179 195 8.9%
    Profit before Tax 352 800 127.1% 2,212 2,886 30.5%
    Tax 44.4 200.8 352.3% 468.9 869.5 85.4%
    Profit after Tax/(Loss) 308 599 94.6% 1,743 2,017 15.7%
    Net profit margin (%) 10.3% 19.9%   17.9% 19.0%  
    No. of Shares (m) 412.5 412.5   412.5 412.5  
    Diluted Earnings per share* 3.0 5.8   4.2 4.9  
    P/E (at current price)   29.8     35.4  
    *(annualised)            

    To compensate the impact of sluggish advertisement revenues (8% decline in FY02), the company took several initiatives. These include converting its leading channels Zee TV and Zee News into pay mode with effect from June 2001. Consequently, its pay revenues recorded a growth of 225% in FY02 to Rs 987 m, accounting for 9% of total revenues. In the coming year, the company plans to focus on regional channels under the brand 'Alpha' to tap the full potential of the pay market. Total subscription fees of the company increased by 66% in FY02. Siticable registered a growth of over 40% in both revenues and operating profits during the year. In order to maintain the healthy growth in revenues in the coming year, the company started to provide Internet over cable in Bangalore and Mysore.

    To strengthen its content business, it launched many new programmes on prime time on its flagship channel, Zee TV. Some of the new launches include Ramayana, Saanjhi and Jeena Isi Ka Naam Hai. During the beginning of fiscal 2003, Zee launched three major shows. The major among them was Khelo Number Khelo, a game show interlinked with Playwin games, India's first online lottery. Advertisement revenues of the company however, remained under pressure during the fourth quarter as TRP ratings have not shown any improvements. The management has given the guidance for weak advertisement revenues in FY03.

    Zee's international business showed health growth of 11% in revenues. Its US and UK subsidiaries posted strong rise in operating margins while its African subsidiary revenues declined by 42%. In April 2002, the company has also started a separate encrypted broadcast beam for Zee TV in Middle East, Pakistan, Bangladesh and Nepal to strengthen its advertisement revenues and enhance pay revenues. The separate beam allows the company to tailor content to coincide with prime time in different markets.

    Rs m) 4QFY01 4QFY02 Change FY01 FY02 Change
    Sales 1,198 1,053 -12.1% 3,847 3,941 2.5%
    Other Income 166.3 211.8 27.4% 511.1 765.9 49.9%
    Expenditure 858 858 0.0% 2,484 2,669 7.4%
    Operating Profit (EBDIT) 340 195 -42.7% 1,363 1,272 -6.6%
    Operating Profit Margin (%) 28.4% 18.5%   35.4% 32.3%  
    Interest 82.3 143.4 74.2% 211.4 590.3 179.2%
    Depreciation 13.5 20.5 51.9% 42.7 70.1 64.2%
    Profit before Tax 411 243 -40.8% 1,620 1,378 -14.9%
    Tax -62.3 31.6 -150.7% 237.7 332.5 39.9%
    Profit after Tax/(Loss) 473 211 -55.3% 1,382 1,045 -24.4%
    Net profit margin (%) 39.5% 20.1%   35.9% 26.5%  
    No. of Shares (m) 412.5 412.5   412.5 412.5  
    Diluted Earnings per share* 4.6 2.0   3.3 2.5  
    P/E (at current price)   84.4     68.3  
    *(annualised)            

    Among other new developments, the company has started uplinking some of its channels from India including Zee News and channels under the 'Alpha' brand. This will help the company in improving revenues and lowering of cost due to better operating efficiencies. Its operating margins have already shown a sharp rise to 30% during the fourth quarter from 19% in the comparable previous quarter. The margins are likely to rise further once the company implements corporate restructuring plans whereby it aims to reduce the number of subsidiaries from 23 to 12 by 3QFY03. Its acquisition of stake in ETC Network and Padmalaya Telefilms is yet to be completed and results of the same would be reflected only after the June quarter of FY03.

    At current market price of Rs 173, Zee is trading at a P/E of 35x FY02 earnings. The Zee Network recorded a discouraging 16% growth in profits for FY02. The coming year is also likely to be challenging for the network as the new programmes launched by the channel is yet to make any impression. Its regional channels and international subsidiaries have however made a strong turnaround in the current year. The growth potential of subscription fees is also immense. The company's fortunes however, depend on advertisement revenues which still forms 60% of total revenues. Consequently, earnings growth in FY03 depends on whether the channel is able to bring an improvement in TRP ratings.

     

     

    Equitymaster requests your view! Post a comment on "Zee: Ready for takeoff?". 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

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    Dear PM Modi, India is Already Land of Self-Employed, and It Ain't Working(Vivek Kaul's Diary)

    Aug 21, 2017

    Most Indians who cannot find jobs, look at becoming self-employed.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    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!

    Think Twice Before You Keep Money In A Savings Bank Account(Outside View)

    Aug 22, 2017

    Post demonetisation, a cut in bank savings deposits rates was in the offing.

    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 24, 2017 10:58 AM

    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 5-YR ANALYSIS

    Detailed Financial Information With Charts

    COMPARE ZEE ENTERTAINMENT WITH

    MARKET STATS