In addition to operational improvement, brokerages believe that the worst for the company — on the balance sheet front — may be behind. After two years of deterioration because of investments in content along with write-offs, the company indicated that it would be able to deliver free cash flow to net profit of 50 per cent from financial year 2021-22 (FY22). Higher corporate governance disclosures and induction of new board members, too, is seen in a positive light.
Though this should help boost investor confidence, analysts are cautious on receivables, especially of subscription revenues from group companies
Dish TV and Siti Networks. Analysts at Kotak Securities believe the stock could be up for rerating if the company cancels the capital-intensive Sugarbox project, and there is material improvement in operating and financials of its over-the-top application ZEE5.
Another headwind would be the implementation of new tariffs, which could hit subscriptions.
While the stock has gained 63 per cent since the beginning of August because of multiple factors, there is little upside from the current level, as most of the positives are reflected in the price.