The brokerage said that Zee Entertainment’s
shares fell 55% after its proposed $10 billion merger with Sony was called off, leading to the stock trading at “rock-bottom” valuations of 8x.
Advertising-led growth will lead to Zee Entertainment’s re-rating going forward, according to CLSA, who also said that India’s No. 2 TV network is also ramping up its presence in the OTT space via ZEE5.Zee Entertainment’s Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) margins have widened from their historical lows by 9 percentage points to hit 16% levels. By financial year 2027, CLSA expects this figure to expand by another 6 percentage points.
The company also has zero debt and cash worth ₹1,700 crore on its books.CLSA expects Zee Entertainment’s EBITDA and Profit After Tax (PAT) to grow at a Compounded Annual Growth Rate (CAGR) of 22% and 33% over financial year 2026-2027 even if the advertising revenue grows by 6% year-on-year.
The brokerage expects the stock to double over the next 12-24 months as its market cap-to-sales ratio of 1x is at a 60% to 80% discount to the Reliance-Disney JV and Sun TV.
Earlier this month, Zee Entertainment’s promoters had increased their stake in the company by buying shares worth nearly ₹27 crore from the open market, taking their total holding to 4.28% from 3.99% earlier.
Brokerage firm Nuvama had written in a note back then that this would help boost confidence of minority shareholders. The brokerage has a price target of ₹185 on Zee Entertainment over the next 12 months.
Out of the 20 analysts that have coverage on the stock, 10 of them have a “buy”, while five analysts each have a “hold” and “sell” rating.
Shares of Zee Entertainment are trading 4.6% higher at ₹104.9. The stock is down 15% so far in 2025.
First Published: Mar 20, 2025 9:54 am IS
