Zee Entertainment’s revenue grew by 10% year-on-year (YoY), an 8% beat, in the fourth quarter of FY24, driven by a recovery in FMCG ad spending.
This growth led to a 39% increase in EBITDA and a 58% rise in adjusted PAT YoY, significantly aided by cost control measures. Management anticipates further recovery in ad revenue in FY25 and expects margin improvements, aligning with their revenue/EBITDA CAGR estimates of 12%/37% over FY 24–26. Consequently, revenue and EBITDA estimates for FY 25-26 remain largely unchanged. With the merger process now called off, the company’s future growth plans will be a key focus. A Neutral rating on the stock is maintained, with a target price of Rs 160 per share.
Zee’s consolidated revenue grew 10% YoY to Rs 21.7 billion, led by advertising revenues. Advertising revenues increased by 10% YoY to Rs 11.1 billion, a 16% beat, driven by a recovering macro advertising environment and increased spending by FMCG clients. Subscription revenue grew 12% YoY to Rs 9.5 billion, in line with expectations, due to a pickup in linear subscription revenue post-NTO 3.0 and ZEE5. However, revenues from other sales and services declined by 57% YoY, primarily due to fewer releases during the quarter.
Total operating expenses for Zee remained flat YoY at Rs 19.6 billion, reflecting controlled programming and content costs. This resulted in a 39% increase in EBITDA to INR2.1 billion, an 80% beat, with margins improving by 250 basis points YoY to 9.7%, a 390 basis points beat. ZEE5 revenue was Rs 2.4 billion, up 8% YoY, driven by improved subscriptions, though EBITDA losses stood at Rs 2.7 billion. Adjusted for ZEE5, the linear TV business saw revenue and EBITDA grow by 2% and 3% YoY, respectively.
The company reported an exceptional loss of Rs 276 million, attributed to merger-related employee expenses and restructuring costs. Profit after tax (PAT) was Rs 122 million, compared to a loss of Rs 729 million YoY. Adjusted PAT, excluding exceptional items, was Rs 1.06 billion, up from Rs 669 million in 4QFY23. For the full fiscal year FY24, revenue grew by 7%, while EBITDA and PAT declined by 18% and 21% YoY, respectively, with the EBITDA margin impacted by investments in content and technology. The company recommended a dividend of Rs 1.
