Shares of Zee Entertainment Enterprises Ltd (ZEEL) plummeted to a 52-week low of Rs 62.22 in Monday's trading, marking a significant 6.39 percent decline. This sharp fall comes on the heels of the company's September quarter (Q2 FY27) earnings announcement, released after market hours on Friday, which showed a substantial dip in profitability.
Q2 Performance Highlights and Brokerage Reactions
Motilal Oswal Financial Services Ltd (MOFSL) reported that Zee experienced another quarter of subdued financial performance, with its Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) contracting by approximately 52 percent year-on-year. This figure notably missed MOFSL's estimates by 17 percent, signaling deeper challenges than anticipated.
Despite the overall decline, the company saw a 30 percent year-on-year growth in subscription revenue, largely attributed to the broadcast of the FIFA World Cup 2026. Advertising revenue, after several quarters of decline, remained flat, which MOFSL also linked to the World Cup and an improved content slate.
Brokerage Outlooks and Revised Target Prices
- Motilal Oswal Financial Services (MOFSL): Reaffirmed its 'Neutral' rating but reduced its target price for ZEEL to Rs 70, down from an earlier Rs 80. The revised target is based on an estimated 12x price-to-earnings (P/E) multiple for December 2028.
- JM Financial: Maintained its 'REDUCE' rating and further trimmed its 12-month target price to Rs 67 from Rs 69. The firm also cut its FY27-FY28 earnings per share (EPS) estimates by 3-27 percent, primarily due to lower margin assumptions.
- Elara Securities: Shifted its rating from 'Sell' to 'Reduce' and lowered its target price to Rs 70 from Rs 80. Elara highlighted ongoing concerns including lower margins, Securities and Exchange Board of India (Sebi) investigations, and a copyright dispute with JioStar as significant overhangs. The brokerage subsequently cut its EPS estimates by 36.6 percent for FY27, 14.6 percent for FY28, and 14.7 percent for FY29.
- Nuvama: While retaining a 'BUY' rating on the stock, Nuvama adjusted its target price downwards to Rs 94 from Rs 117. This revision accounts for elevated content and marketing expenditures, leading to an approximate 19 percent cut in its FY27-FY29 EPS estimates. Nuvama noted that Zee had received Rs 740 crore upfront from a promoter warrant issue.
The collective actions of these leading brokerages underscore investor caution regarding ZEEL's near-term profitability and growth prospects following a challenging quarter.