Zee Entertainment Enterprises Ltd. (ZEEL) shares climbed almost 7 percent in intra-day trading on Thursday, March 20, following a bullish outlook from global brokerage CLSA. The firm maintained an 'outperform' rating on the stock, with a target price of ₹170, indicating a potential upside of nearly 70 percent from the previous close.
CLSA believes that Zee’s stock could potentially double over the next 12-24 months, driven by advertising revenue-led growth, which could help re-rate the stock. The brokerage highlighted that Zee is currently trading at a low price-to-earnings (PE) multiple of 8 times, with the potential to deliver a 22-33 percent EBITDA/PAT compound annual growth rate (CAGR) over financial years 2026-2027, even assuming a modest 6 percent year-on-year (YoY) growth in advertising revenue.
The brokerage also underscored Zee’s position as India’s second-largest TV network, with a growing presence in the over-the-top (OTT) segment through its platform, ZEE5. CLSA noted that the company’s EBITDA margin has improved by 9 percentage points from its previous lows. Additionally, Zee is debt-free and holds ₹1,700 crore in cash reserves. The company’s market cap-to-sales ratio of 1 times currently trades at a significant 60-80 percent discount compared to the Reliance-Disney joint venture and Sun TV.
Promoters Increase Stake, Boosting Investor Confidence
In a recent development, Zee’s promoters purchased 27 lakh shares worth ₹27 crore through open market transactions. This increased the promoter holding in the company to 4.28 percent from 3.99 percent. Brokerage Nuvama, in a report this month, viewed this stake increase as a sign of confidence in the company’s long-term growth potential. Nuvama believes this move will boost the confidence of minority investors.
The brokerage also highlighted that Zee’s subscription revenue remained strong, marking seven consecutive quarters of expansion as of Q3FY25. Although advertising revenue has been weak, Nuvama expects it to recover from Q2FY26 onwards, driven by urban demand recovery and improved gross margins for FMCG players due to lower crude oil prices. Nuvama maintained a 'Buy' rating on the stock, citing its attractive valuation at 10 times PE, compared to its one-year average of 14 times.
Stock Price Performance
Zee Entertainment’s stock jumped as much as 6.6 percent during the session, hitting an intra-day high of ₹106.80. Despite the rally, the stock remains around 37 percent below its 52-week high of ₹168.70, recorded in June 2024. However, it has rebounded by 20 percent from its 52-week low of ₹89.29, which it hit earlier this month.
Over the past year, the media stock has shed 29 percent. However, it has gained over 12 percent in March alone, reversing a three-month losing streak. The stock had declined by 12 percent in February, 13 percent in January, and 6 percent in December.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.