Zee share price jumps over 4% after posting Q4 profit; Should you buy the stock?

Zee share price rallied over 3% in early trade on May 18 after the company reported its Q4 results, posting net profit during the quarter as against a loss in the year-ago period. Zee shares jumped as much as 4.66% to ₹141.25 apiece on the BSE.

Zee Entertainment Enterprises reported a profit of ₹13 crore in the fourth quarter of FY24 as against a loss of ₹196 crore in the year-ago period. On a sequential basis, the company had posted a profit of ₹58.5 crore in Q3FY24.

The company’s total income in Q4FY24 rose to ₹2,185.29 crore from ₹2,126.35 crore, YoY. Advertising revenue during the quarter increased to ₹1,110.2 crore from ₹1,005.8 crore in the year-ago quarter. Zee’s advertising revenue jumped up 10.4% YoY in Q4FY24, after a decline (YoY) for the past six consecutive quarters. 

Read here: Zee on track to achieving balanced cost structure, enhanced performance: Punit Goenka

Growth was driven across language markets and aided by recovery in the FMCG sector, where green shoots observed over previous quarters have become stronger.

Zee’s CEO and Managing Director Punit Goenka said that the company is on track to achieving a balanced cost structure and enhancing its fiscal performance as it targets 18-20% EBITDA margin by 2025-26.

Management expects the revenue growth to sustain, though interventions may result in near-term one-time costs impacting margins. 

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“We are currently building in some recovery on the advertising front (~7% growth in FY25E/26E) aided by a lower base and persistent recovery in overall ad spending. Subscription revenues should see an uptick due to price hikes. Margins should also improve on account of multiple interventions, though we reiterate that a significant re-rating should happen in case of a new buyer/partner,” said Pulkit Chawla, Research Analyst at Emkay Global Financial Services.

Any unfavorable decision in legal cases the company is involved in could be a key risk, he added.

The brokerage firm tweaked its FY25 and FY26 EBITDA by ~2%, factoring in the Q4 performance, and maintained a ‘Reduce’ rating on Zee share with a target price of ₹150 apiece.

At 9:18 am, Zee shares were trading 4.41% higher at ₹140.90 apiece on the BSE. 

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