Zee Entertainment Q2 Review- A Tad Better QoQ, Balance Sheet Pain Continues, Merger Key Trigger: Dolat Capital
Imending merger makes the risk-reward favourable from a medium-term perspective.
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Dolat Capital Report
Zee Entertainment Enterprises Ltd.’s Q2 FY23 was marginally better driven by catch-up revenues in subscription and higher other operating income.
Revenue/ Ebitda/adjusted profit after tax were up 2.5/down 36/down 56% YoY. Free cash flow generation continues to be a challenge with persistent rise in investments across linear, digital and movie business with no substantial improvement in market share or financials.
Increase in Zee5 losses of 18% QoQ (Rs 2.76 billion loss in Q2 FY23) is additional pain point. Network viewership share improved marginally QoQ from 16.1% to 16.4% and is a positive.
Post the impending Sony-Zee merger the legacy issues of Zee shall subside and growth, traction in digital etc. shall follow as the new board takes over.
But, combined go-to-market strategy and merged co financials disclosure would be only post the closure of the transaction which shall take four-five months in our view.
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