Zee Entertainment slides 4% on Q1 report; what should investors do now?

Zee Entertainment shares declined 3.2 per cent, logging an intraday low at ₹129.45 per share on the BSE

Zee Entertainment Enterprises shares declined 3.7 per cent, logging an intraday low at ₹128.75 per share on the BSE. Even though the company posted a growth in net profit, its revenue and Earnings before interest, tax, depreciation and amortisation (Ebitda) declined year-on-year (Y-o-Y).

 

At 11:54 AM, Zee Entertainment share price was trading 2.84 per cent lower at ₹129.95 per share on BSE. In comparison, the BSE Sensex rose 0.28 per cent to 82,419.39. 

 

The market capitalisation of the company stood at ₹12,481.95 crore. The 52-week high of the company stood at ₹154.85 per share, and the 52-week low was at ₹89.29.  CATCH STOCK MARKET LIVE UPDATES TODAY

Zee Entertainment Q1 results 

In the June quarter (Q1FY26), Zee Entertainment reported a consolidated net profit of ₹143.7 crore as compared to ₹118.1 crore, up 22 per cent. Its revenue, on the other hand, declined 14 per cent Y-o-Y to ₹1,824.8 crore as against ₹2,130.5 crore a year ago. 

 

The Earnings before interest, tax, depreciation and amortisation (Ebitda) for the quarter under review stood at ₹228 crore as against ₹271.6 crore. The Ebitda margins remained stable at 12.5 per cent, as compared to 12.7 per cent a year ago.   ALSO READ | L&T Finance hits new high after over 7 years; should you buy, hold or sell?

Brokerages' view on Zee Entertainment 

Motilal Oswal has reiterated 'Neutral' on the stock, but has cut the target to ₹130 per share from ₹150. The brokerage believes that even though the valuations remain attractive at 13x FY27E earnings per share (EPS), persistent weakness is seen in ad revenue.

 

In Q1, advertisement revenue of the company declined 17 per cent Y-o-Y to ₹830 crore, as domestic ad revenue dipped 19 per cent Y-o-Y, impacted by a slowdown in fast-moving consumer goods (FMCG) spending and an extended sports calendar (IPL). 

 

Further, a sustained recovery in domestic advertisement revenue and a favourable outcome in ongoing litigation for ICC rights with Star will remain key for rerating, according to Motilal Oswal. 

 

ICICI Securities has maintained a 'Buy' with a target of ₹185 per share as it expects losses to reduce further with operating leverage. 

 

JM Financial Institutional Securities has also maintained 'Buy' with a revised target of ₹200 per share from ₹190. 

 

 "We expect a gradual recovery to both ad-revenues and margins. We build -1 per cent/16 revenue growth/Ebitda margin for FY26E. No equity dilution however, limits impact on earnings. With no promoter stake raise now, value unlocking through music remains a key trigger," the brokerage noted.