What explains the upbeat outlook for Zee Entertainment

Zee Entertainment Enterprises performed better than expected in the second quarter of FY 2023-24 (Q2 FY24), according to a research report by stock broking firm Prabhudas Lilladher. Its EBITDA margin reached 13.6 per cent, higher than the predicted 11.6 per cent, thanks to its successful movie business and reduced losses in streaming service ZEE5.

Zee is expected to see a 9 per cent increase in sales over the next two years, with EBITDA margins of 12.1 per cent and 18.2 per cent for the next two fiscal years. The company's merger with SPNI (Sony Pictures) will likely proceed smoothly as legal approvals are in place, says the report.

The recommendation to buy shares remains, with a target price of Rs 314 based on future earnings predictions, according to the Prabhudas Lilladher report.

Zee's total revenue grew by 20.5 per cent compared to last year, reaching Rs 24,37.80 crore. While advertising revenue fell slightly, subscription income increased, and income from other sales and services, particularly movies like Gadar-2, Bro, and King of Kotha, grew significantly, says the report. 

Read the Prabhudas Lilladher report here.