Zee Entertainment falls 3% as nearly 6% equity change hands via block deals

Shares of Zee Entertainment Enterprises (ZEEL) declined 3 per cent to Rs 202.60 per share in Monday’s intra-day trade, after nearly 6 per cent of total equity of the company changed hands via block deals.

The stock fell 5 per cent from its intra-day high of Rs 213.80. In comparison, the S&P BSE Sensex was down 1 per cent at 59,774, at 01:08 pm.

At 9:15 am; around 54.77 million equity shares, which represented 5.7 per cent of total equity of ZEEL changed hands on the BSE. The names of the buyers and sellers were not ascertained immediately.

According to a report, foreign institutional investor Invesco Developing Markets Fund sold its entire 5.65 per cent stake in ZEEL via block deals.

In the January-March quarter (Q4FY23), analysts believe Zee to witness subdued advertising revenue growth due to lower advertising demand since the festive season. Higher cost inflation continues to hurt advertisers, who have restricted any meaningful expenditure on broadcasters.

"In Q4, Zee is likely to face the impact of blacking out of its channels for a few days, owing to its dispute with multiple system operators (MSO)/local cable operators (LCOs) on both, its advertising & subscription revenues. Zee is also likely to face a double whammy, with higher content costs attributable to the broadcasting of ILT20 in Q4. This is again likely to result in subdued margins for broadcasters," the brokerage firm said.

Moreover, analysts also believe that the dvertising revenue will be impacted by the removal of a few channels from the Free to Air platform.

"Advertising revenue will also be impacted by the blacking out of Zee's channels for a few days due to the conflict between broadcasters and cable operators. Subscription revenue is also likely to be hit due to this issue,” the brokerage firm added.

Therefore, with weaker revenue flow-through, margins are likely to contract on a sequential basis, said analysts. Margins, further, are also likely to be negatively affected by higher investments, and additional expenses pertaining to ILT20 present in this quarter.