Abneesh Roy of Edelweiss Securities said the brokerage is positive on Zee Entertainment after the company reported strong financial results for the quarter ended March 31. "On the profit and loss (P&L) clearly it was a line-by-line beat and based on the market share the expansion also which we have seen in some of the regional markets – and now my sense is from Q1 end and Q2 we will see recovery in the subscription revenues also,” he said.

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The brokerage has a 'buy' rating on the stock, with a target price of Rs 499 per share.

“Margin contraction was lower than our and street expectations. In terms of other financial liabilities, clearly, the company has got some advances from the broadcasters and multiple MSOs and DTH because they have given discounts to that, so this is something which the company has got, so the apprehension is why this is not happening earlier and why it has happened now,” he added.

“The inventories and cash refund – for content creation company has given out Rs 693 crore. This is across multiple geographies and this is across both digital rights, production of movies and even for the TV content. So this is for lock-in and because there is inflation happening in content that is why this advance was given and the company can recover in terms of inventory or cash refund if there is a delay or if the content doesn’t happen. So they do have that safety but yes, there have been two balance sheet concerns but this is lower than initial expectations,” said Roy.

“I think now with a stable government and political uncertainty behind us, we would expect the deal pace to pick up. Zee will be open to both financial investors and strategic. Financial investors – the approvals will be much faster while for a strategic player, the deal price could be better but then CCI approval can take 35-40 days. So Zee will be evaluating this. My sense is – yes some delays have definitely happened but with political certainty being there, the deal pace will definitely pick up from here,” he further mentioned.

First Published:May 28, 2019 12:05 PM IST