Zee Entertainment Enterprises Limited is a media and entertainment company engaged in providing broadcasting services. The Company operates through Content and Broadcasting segment.
19.7% Network Share
Stock Details |
|
| Market Cap. (Cr.) | 18816.28 |
| Face Value | 1.00 |
| Equity (Cr.) | 96.50 |
| 52 Wk. high/low | 405.50/114.00 |
| BSE Code | 505537 |
| NSE Code | ZEEL |
| Book Value (Rs) | 98.86 |
| Industry | Entertainment |
Share Holding Pattern % |
|
Promoter |
4.77 |
| FIIs | 78.88 |
| Institutions | 10.91 |
| Non Promoter Corp. | 1.20 |
| Public & Others
Government |
4.10
0.15 |
| Total | 100.00 |
Key Highlights
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Zee launched three channels viz. Zee Punjabi, Zee Thirai, Zee Biskope in January 2020. Two more regional channels are slated to be launched in the coming quarters. The management expects that cash flow generation will be witnessed after full-fledged launch of the channels.
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ZEE5 is one of the most widely available entertainment platforms due to extensive partnerships with telecom operators. Zee5 has seen the biggest growth with an increase of 259 percent growth between March 24 and April 24.
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Zee Digital is continuing the tremendous growth of 134 percent seen in the first two months of this year. The biggest drivers for Zee Digital during the month of March 2020 were mainstream sites such as Zee Business, India.com, and Zee News. Each of these websites saw a growth of 160 percent, 113 percent and 75 percent respectively.
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Customers of Airtel Thanks now getting free, unlimited access to ZEE5’s premium content library as part of their exclusive benefits. ZEE5 is, meanwhile, looking to strengthen its relationships with Airtel’s higher spending subscriber base.
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Zee Music Company, the Zee Group’s music business with a subscriber base of 55.4 million on YouTube, will be looking at acquisitions in the next few years. Zee Music Company is the second most subscribed Indian music channel on YouTube.
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Zee5 launched 26 original shows and movies, of which 14 were in six different regional languages. With a strong content line-up across genres and languages, ZEE5 is on track to release 70+ originals.
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The overhang of pledge led uncertainty is now over and the company’s intent on improving corporate governance through board reconstitution (by FY21 end) will drive investor confidence.
Business Overview:
Indian Television
Hindi Entertainment – Zee TV HD/SD, & TV HD/SD, Zee Anmol, Big Magic
Hindi Movie Cluster – Zee Cinema HD/SD, & Puctures HD/SD, Zee Action, & Xplor
HD , Zee Classic.
Regional Entertainment Channels
The regional portfolio is spread across 9 languages – Marathi, Bengali, Telugu, Kannada, Tamil, Bhojpuri, Odiya, Malayalam and Punjabi. Zee Marathi, Zee Sarthak, Zee Bangla & Zee Kannada are strong performers in the market with Zee Keralam growing steadily.
Niche Channels
ZEE also brings international content from across the world. Zee Café provides the best of English entertainment to Indian audiences, while &privé HD entertains viewers with premium English movies.
International
| Country | America | Europe | MENAP | Asia-Pacific | Africa |
| No. Channels | 23 Channels | 4 Channels | 5 Channels | 5 Channels | 3 Channels |
Movies and Music
Zee Studios is the film production and distribution arm of ZEE Entertainment.
Zee Music Company (ZMC) is one of India’s foremost music publishing labels. Zee Music Company is the second most subscribed Indian music channel on YouTube with over 49 million subscribers.
Digital
ZEE5– ZEE5 offers viewers a completely integrated entertainment offering with both On-Demand and Live TV. It comes packed with 1,00,000 hours of On Demand content, including exclusive Originals, Indian and International Movies and TV Shows, Music, and Health and Lifestyle videos across languages.
IndiaWebportal Pvt. Ltd.
IWPL runs a suite of 24 websites focusing on entertainment, news and sports content. India.com is the flagship website and other websites including TheHealthSite.com, Bollywoodlife.com and BGR.in are leaders in their respective categories.
Zee5
ZEE5 recorded a peak DAU (Daily Active User) base of 11.4 mn in the month of December.
ZEE5 had 56 million monthly active users in December 2019.
ZEE5 is one of the most widely available entertainment platforms due to extensive partnerships with telecom operators, OEMs, ISPs, and e-commerce platforms. During the December quarter, ZEE5’s partnership with Tata Sky Binge and IRCTC went live, accelerating subscription growth. ZEE5 is the only OTT platform integrated with IRCTC.
Tremendous growth in Zee Digital Business
Zee Digital is continuing the tremendous growth of 134 percent seen in the first two months of this year. The digital publisher crossed 150 million users on ComScore in March 2020. This is the highest growth among the top media groups in the country.
The biggest drivers for Zee Digital during the month of March 2020 were mainstream sites such as Zee Business, India.com, and Zee News. Each of these websites saw a growth of 160 percent, 113 percent and 75 percent respectively.
Zee5 – Highest Growth between March 24 and April 24
Zee5 has seen the biggest growth with an increase of 259 percent between March 24 and April 24. At the same time, popular streaming service Netflix saw a growth of 204 percent. Meanwhile, Amazon Prime Video saw a rise of 189 percent and AltBalaji saw a growth of 174 percent. Reliance Jio’s JioCinema saw a 161 percent growth and Disney+ Hotstar saw a 149 percent growth.
Partnership with Airtel will further increase subscriber base.
Customers of Airtel Thanks will now get free, unlimited access to ZEE5’s premium content library as part of their exclusive benefits, the companies announced. ZEE5 is, meanwhile, looking to strengthen its relationships with Airtel’s higher spending subscriber base.
Live
Zee LIVE – Currently, under its umbrella are 3 IPs across genres – Arth – A Culture Fest in culture, Supermoon in music and comic and Zee Educare in education.
Zee Theatre – strives to bring the best of Indian theatre to the world, with an aim to revive, restore and spread this rich cultural heritage by partnering with theatre stalwarts to bring together some of their finest works for audiences to experience.
REVENUE STREAMS
Advertising- Advertising revenue is primarily driven by reach and viewership of content. Consumer staples, consumer durables, telecom, auto and e-commerce are key advertisers.
Subscription – Domestic broadcast, international and digital businesses generate subscription revenue. The content reaches through distribution partners such as DTH and cable companies in case of domestic and international broadcast business. In digital, subscription revenue comes directly from consumers or through partnerships with telecom operators and other players in the digital eco-system.
Other Sale and Services
Syndication – This primarily relates to licensing of content (shows, movies etc.) in the international markets or to other broadcasters in India.
Theatrical – Revenue from the theatrical release of the movies produced by Company
Music licensing – Revenue from the licensing of music catalogue to music streaming.
Others – Movie distribution: Revenues earned from distribution of movies. Ticketing and Sponsorships: Revenues from on-ground events, live shows and theatre.
Revenue Contribution from Subscription segment is increasing
Shareholding Pattern
| Shareholding Pattern (%) | ||||
| Holder | Mar-20 | Dec-19 | Sep-19 | Jun-19 |
| Promoter | 4.77 | 4.87 | 22.37 | 35.8 |
| FIIs | 78.88 | 78.08 | 57.75 | 47.34 |
| Institutions | 10.91 | 11.84 | 13.08 | 11.24 |
| Non- Institutions | 5.44 | 5.21 | 6.8 | 5.62 |
| Total | 100 | 100 | 100 | 100 |
Financial Performance
| Particulars ( in Rs. Cr.) | 201912 | 201909 | 201906 | 201903 |
| Revenue from Operations | 2048.65 | 2122.01 | 2008.12 | 2019.27 |
| Other Income | 70.95 | 68.12 | 106.21 | 57.04 |
| Total Income | 2119.6 | 2190.13 | 2114.33 | 2076.31 |
| Employee Expenses | 207.52 | 212.26 | 200.33 | 201.46 |
| Selling & Administrative Expenses | 190.76 | 125.26 | 195.46 | 193.01 |
| Other Expenses | 1124.9 | 1272.13 | 884.7 | 1047.18 |
| Impairment of Assets | – | – | – | 21.8 |
| TOTAL EXPENDITURE | 1523.18 | 1609.65 | 1280.49 | 1463.45 |
| PBIDT | 596.42 | 580.48 | 833.84 | 612.86 |
| Interest | 20.04 | 17.97 | 20.51 | 114.17 |
| PBDT | 576.38 | 562.51 | 813.33 | 498.69 |
| Depreciation | 65.55 | 58.33 | 68.99 | 56.78 |
| PBT | 510.83 | 504.18 | 744.34 | 441.91 |
| Tax | 180.56 | 105.33 | 227.86 | 151.58 |
| Deferred Tax | -18.33 | -13.24 | -13.28 | -2.2 |
| Profit After Tax | 348.6 | 412.09 | 529.76 | 292.53 |
| EPS | 3.64 | 4.30 | 5.52 | 3.04 |
Key Financial Ratios
| Key Financial Ratios | |||
| Particulars | Mar-19 | Mar-18 | Mar-17 |
| EBITDA Margin (%) | 32.32 | 31.05 | 29.95 |
| Net Profit Margin (%) | 19.75 | 22.1 | 20.12 |
| ROCE (%) | 26.32 | 25.83 | 21.13 |
| Total Debt/Equity | 0.04 | 0.17 | 0.34 |
| Current Ratio | 3.32 | 4.05 | 4.87 |
| Interest Coverage Ratio | 19.82 | 16.08 | 13.23 |
Balance Sheet
| Particulars ( in Rs. Cr.) | 201903 | 201803 | 201703 |
| SOURCES OF FUNDS : | |||
| Share Capital | 836.9 | 1240.3 | 96 |
| Reserves Total | 8827.9 | 7465.7 | 6594.4 |
| Total Shareholders’ Funds | 9664.8 | 8706 | 6690.4 |
| Minority Interest | 14.3 | 14.2 | 1 |
| Secured Loans | 3.2 | 1.7 | 1.9 |
| Unsecured Loans | 370.4 | 380.2 | 2201.2 |
| Total Debt | 373.6 | 381.9 | 2203.1 |
| Policy Holders Fund | 0 | 0 | 0 |
| Other Liabilities | 135 | 89.2 | 76.8 |
| Total Liabilities | 10187.7 | 9191.3 | 8971.3 |
| APPLICATION OF FUNDS : | |||
| Gross Block | 2270.4 | 2082 | 1361.2 |
| Less: Accumulated Depreciation | 855.9 | 605.9 | 445.6 |
| Net Block | 1414.5 | 1476.1 | 915.6 |
| Capital Work in Progress | 156.1 | 91.9 | 155.7 |
| Investments | 976.5 | 1528.9 | 1343.1 |
| Current Assets, Loans & Advances | |||
| Inventories | 3850.5 | 2627.8 | 1696.2 |
| Sundry Debtors | 1827.4 | 1536.5 | 1241.8 |
| Cash and Bank | 1221.8 | 1611.7 | 2613.3 |
| Loans and Advances | 2576.6 | 1444.4 | 1389.2 |
| Total Current Assets | 9476.3 | 7220.4 | 6940.5 |
| Less : Current Liabilities and Provisions | |||
| Current Liabilities | 2401 | 1550.6 | 1208.9 |
| Provisions | 344.3 | 387.8 | 77.3 |
| Total Current Liabilities | 2745.3 | 1938.4 | 1286.2 |
| Net Current Assets | 6731 | 5282 | 5654.3 |
| Deferred Tax Assets | 0 | 0 | 97.5 |
| Deferred Tax Liability | 0 | 0 | 7.2 |
| Net Deferred Tax | 0 | 0 | 90.3 |
| Other Assets | 909.6 | 812.4 | 812.3 |
| Total Assets | 10187.7 | 9191.3 | 8971.3 |
Key Management Commentary
Punit Goenka CEO, will remain the sole representative of the promoter family on the board of the company. Mr. Chandra will not be putting up his name for re-election in the next fiscal and will assume the position of Chairman Emeritus.
We have seen losses in the Middle East market; we have seen losses in the UK market. We will be shutting of our linear business in these markets and only be available through ZEE5. ZEE5 has seen good traction in certain markets, definitely in Asian market and Europe markets.
In a status quo scenario you would definitely see low double-digit growth.
Current year is the peak investments of ZEE5 and that’s why you saw over the last 9 months, 15-20% kind of growth. It will now normalize and I think we should be in the ballpark of 12% to 13% odd growth in the coming fiscal.
While the industry is already working out mechanisms to start shoots while following all necessary social distancing and safety norms, streaming players say the lockdown has also been an opportunity to innovate with remote working methods and finish post-production on shows that had been shot earlier. Punit Goenka, managing director and CEO, ZEE said it is time for the industry to define a new normal, to ensure that consumers remain well-informed and entertained.
Investment in Sugar Box
Zee Entertainment will invest Rs. 522 crore in its subsidiary, Margo Networks (80% holding), which operates under brand name SugarBox over the next couple of years.
Currently, sugarbox network consists of 250 POIs with 700k users a day. The company plans to expand the existing network by 35x in a 4- phase process by June 2022. The scaled-up network will have 8300 POIs with an estimated reach to 2.5 crore daily users. The company has already completed installation in all rakes of Hyderabad and Chennai Metro with exclusivity contracts for six and 10 years, respectively.
Outlook:
With the promoter down to around 5 per cent, it’s important to monitor the financial and operational performance of the business in the new incarnation (compared to promoters holding a 42 per cent stake a year back). The focus will shift towards growth in traditional business (advertising and subscription) and performance in ZEE5 with respect to investments, monetization, and market standing relative to the competition (global as well as domestic),”. The overhang of pledge led uncertainty is now over and the company’s intent on improving corporate governance through board reconstitution (by FY21 end) will drive investor confidence.
DISCLOSURE IN PURSUANCE OF SECTION 19 OF SEBI (RA) REGULATION 2014
Elite Wealth Advisors Limited does/does not do business with companies covered in its research reports. Investors should be aware that the Elite Wealth Advisors Limited may/may not have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as read more
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