Zee Entertainment slips 3% on Q3 profit fall; most brokerages cut target

Zee Entertainment Enterprises shares slipped 2.9 per cent in trade on BSE, logging an intra-day low at ₹82.55 per share. At 9:26 AM, Zee Entertainment’s share price was trading 2.34 per cent lower at ₹83.11 per share. In comparison, BSE Sensex was up 0.14 per cent at 82,424.42.

 

The selling on the counter came after most brokerages cut their target on the company after it released its December quarter (Q3FY26) results on Thursday. 

Zee Entertainment Q3 results recap:

In Q3, the company reported a 5.1 per cent fall in its consolidated net profit to ₹155.3 crore, as compared to ₹1,63.6 crore a year ago. The company’s revenue was up 15.2 per cent to ₹2,280.1 crore in Q3FY26 on a year-on-year (Y-o-Y) basis, as compared to ₹1,978.8 crore in Q3FY25. 

 

 

Its advertising revenue stood at ₹851.5 crore in Q3 compared to the same quarter last year. Meanwhile, the company’s subscription revenue grew seven per cent to ₹1,050.2 crore. Check detailed results here 

Brokerages’ views on Zee Entertainment 

Elara Capital | Buy | Target cut to ₹140 from ₹150

Elara said Zee’s Q3 margins were muted due to higher costs linked to the Kantara distribution rights, even as the headline performance was in line with expectations. 

 

It added that stability in Zee5’s profitability could emerge as a key lever to arrest any further decline in core broadcasting margins, which could support share price performance. However, incremental margin gains are likely to be sticky, as most cost optimisation initiatives are already behind the company.

 

Factoring in Q3, Elara kept revenue estimates unchanged but cut FY25–FY28E revenue, Earnings before interest, tax, depreciation and amortisation (Ebitda) and PAT estimates by 5–17 per cent. On valuation, the brokerage said core TV broadcasting trades at a fair 4.8x price-to-earnings (P/E), valuing it at 9x Dec-27E, while the digital business is valued at 3x revenue. It added that a potential value unlock in Zee Music could trigger a re-rating.  ALSO READ | Infobeans Technologies gains 3% on Q3 results, bonus announcement; details

Motilal Oswal Financial Services | Neutral | Target cut to ₹90 from ₹95

Motilal Oswal believes a sustained recovery in ad revenues is critical for any meaningful re-rating in valuation multiples.

 

The brokerage cut FY26–FY28E Ebitda estimates by 10–16 per cent and adjusted profit after tax (PAT) by 9–12 per cent, citing continued weakness in advertising and higher content and A&P (advertising & promotion) spends. Despite the multi-year decline in ad revenues, Motilal has still assumed 5 per cent Y-o-Y ad revenue growth over FY26–FY28, but flagged downside risks due to the structural shift of ad spends toward digital platforms.

 

Overall, it builds in a 2.5 per cent revenue CAGR over FY25–FY28, while expecting FY28E Ebitda and PAT to decline 9 per cent and 14 per cent, respectively, as compared to FY25. 

JM Financial Institutional Securities | Buy | Target cut to ₹110 from ₹170

Zee Entertainment’s 3QFY26 operational performance fell short of expectations owing to a contraction in gross margin caused by higher programming and operational costs, the brokerage noted. 

 

The company incurred elevated opex through FY26 along with higher content costs, which are  likely to persist going forward, believes JM Financial, as sustained content investments will be required to drive top line. Besides, with positive Ebitda contribution from Zee5 (which broke even in Q3FY26), margin recovery is likely to be gradual over FY27E–28E. 

 

Factoring in this, the brokerages have reduced FY26E–28E Ebitda by 21–34 per cent and earnings per share (EPS) by 24–37 per cent.

 

Disclaimer: View and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers discretion is advised.