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.
Blurred vision on Zees channel - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • May 11, 2000

    Blurred vision on Zees channel

    The market seems to have reacted negatively to the news that almost 65% of Zees operating profit have come from the sale of a part of library to its sister concern Asia Today Ltd. (ATL). Another interesting factor is that the effective tax rate for the company has fallen to 7.3% (from the level of 24% last year). The company does not seem to have provided for tax on the sale of the library. The company has not provided a clear explanation of the tax provision itself.

    Perhaps the only possible explanation could be that the company has treated the part sale of the library to ATL as exports and hence the company has claimed a tax exemption on the same.

    More significantly, however, the company has drastically scaled down its American Depository Receipts (ADR) issue from the level of $ 1.5 bn (Rs 66 bn) to a level of $ 250 m (Rs 11 bn). A part of the capex requirement is now to be met through the sale of a 10% stake in Siticable, its cable venture.

    The company has reportedly valued its cable business at $ 250 per home and with a reach of over 4 m homes the valuation for the company would work out to around Rs 44 bn. This works out to around 75 times the company's March 2000 turnover. (Siticable has reported a revenue of Rs 590 m for March 2000. One is however not sure whether the company's share of revenues from Siticable's joint ventures with individual cable operators have been consolidated. If one calculates the revenues based on Siticable's subscribers the total revenues works out to over Rs 11 bn assuming that 70% revenues accrues from subscribers and 30% from advertisers. In that case the valuation comes to around four times its annual revenues.) A 10% stake should logically fetch the company around Rs 4.4 bn.

    Subscriber base (in million homes) 4.0
    Subscription revenue (in Rs bn) 9.0
    Advertisement revenue (in Rs bn) 2.7
    Total revenues (in Rs bn) 11.7

    Note: Subscription revenue has been calculated at Rs.150 per month for 4.0 mn subscribers.

    Thus the total funds that the company would be able to garner would be around Rs 15 bn (Rs 11 bn from the ADR plus Rs 4.4 bn from the sale of the stake in Siticable) almost a fourth of what it had originally planned. It would be interesting to see how the company manages it funding requirement.



    Equitymaster requests your view! Post a comment on "Blurred vision on Zees channel". 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

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    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.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    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.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    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


    Aug 18, 2017 11:24 AM


    • 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



    Detailed Financial Information With Charts