On the operational front, the company is expected to report a year-on-year fall of 13-15 per cent in advertising revenues in the December quarter. Because of the economic slowdown, most advertisers have cut their advertising spends in the December quarter.
Compiled by BS Research Team
From mid-single-digit growth in FY20, analysts have now revised the advertising revenue growth estimates downwards to -2 per cent. The company has lost its viewership share in all its leadership markets of Kannada, Marathi and Bangla. The flagship Zee TV also saw a marginal dip in viewership share to 19.9 per cent, behind Star Plus and Sony SAB.
Further, the new tariff order on the restriction of bouquet prices and lower channel retail price will limit the ability of broadcasters to push weak and niche channels. Subscription revenues which have been strong in the recent quarters could take a hit. The company will also have to make investments in Zee5 and scale up its revenues from the over the top segment amid stiff competition.
While the stock is trading at attractive levels of 16 times one-year forward earnings estimates, investors should wait for an improvement on operational performance (advertising and subscription growth), before considering the stock.