Analysts' corner

Zee Entertainment, IPCA Labs & Idea Cellular

ZEE ENTERTAINMENT
Reco price/date: Rs 236/July 1;
Current/target price: Rs 241.95/Rs 275
Robust ad revenue growth led by improvement in viewership market share and subscription revenue growth driven by Media-Pro JV. Healthy cash generation despite increased investment in content, new channel launches and initiatives for brand strengthening in international markets. Total capex for FY13 was Rs 110 crore, which includes purchase of an aircraft worth Rs 36.8 crore. Zee remains our preferred pick given robust FCF generation, sustained market share, translating into healthy ad growth and strong subscription growth led by Media-Pro and digitization. Zee's robust revenue and Ebitda growth of 22 and 29 per cent, respectively, in FY13 and limited capex resulted in strong FCF generation of Rs 290 crore. Net cash and investments at the end of FY13 rose to Rs 1,320 crore from Rs 1,130 crore in FY12. Maintain Buy.

-Emkay Global Financial Services

IPCA LABS
Reco price/date: Rs 625/June 28;
Current/target price: Rs 689.45/Rs 700
We believe export momentum will continue with pick-up in branded promotional and tender sales. Increasing capacity along with improving demand will keep Ipca's export business buoyant even in future. The fear of losing on international tender sales also has subsided with continuation of AMFM (Affordable Medicines Facility for Malaria) programme over CY13-14E. The Artesunate + Amodiaquine (AS-AQ) combination drug (Rs 50 crore) launch is a next strong trigger in tender sales. We believe the Artesunate injectable (high margin and low competition) drug will prove long term growth driver with expected supplies to start by FY15. Additionally, Management expects FDA clearance of the Indore facility in three-four months, which will boost export; we expect full ramp-up in FY14. Recommend Buy.

-India Infoline Research

IDEA CELLULAR
Reco price/date: Rs 137/June 27;
Current/target price: Rs 141.1/Rs 166
Idea will deliver more than 20 per cent Ebitda growth. We expect FY14 Ebitda to grow by 23 per cent. RMS expansion in Mumbai and Bihar will reduce Ebitda losses in new circles. The general rule of thumb is 70 per cent of incremental revenues driven by improvement in voice realisation should flow into Ebitda. Our industry checks suggest that revenue per minute should improve 1.5 paise in Q1FY14E quarter across operators. Given this, even if assume two paise improvement in voice realizations with no minute growth, it would imply an incremental Ebitda of Rs 740 crore (accounting for 54 per cent of incremental Ebitda growth). Idea's new circle margins were negative 21.2 per cent in Q4FY13. Outperformer.

-HSBC Securities