The Zee Entertainment stock is up 15 per cent in trade after NCLT cleared the merger with Sony.
Zee was trading at Rs 278.40 on BSE, up 15 per cent.
ZEEL’s 1Q results exceeded expectations with Revenue/EBITDA coming 6 per cent/29 per cent above abobe estimate, JM Financial Institutional Securities said in a report.
While headline numbers were positive enough, underlying trends were even more encouraging. Ad-spend growth, which picked-up towards 1Q-end, has sustained into 2Q, per the management. Price hikes in linear TV channels after almost three years pushed up subscription revenues (+18 per cent YoY), the report said.
Sustained TV viewership gain should underpin ad/sub growth. Theatrical releases are also turning favourable. Advance bookings of 'Gadar 2', a Zee Studios movie, is indicating a very strong opening.
No incremental provisioning due to litigations was a positive too, suggesting most liabilities are now provided for. A likely positive NCLT order on the proposed merger with Sony (scheduled for Friday) -- at a time when demand is inflecting -- will be the icing on the cake, the report said.
“We remain constructive on the stock. We raise our FY24-26E revenues estimate by 3 per cent, reflecting inflection. However, moderation in margin estimates (to bake in sustained investment in content/SG&A) results in 3-4 per cent cut to our earnings”, it said.
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