Zee Entertainment Enterprises (Zee) shares jumped 15 percent on Wednesday as brokerages remained bullish even after the company reported a weak set of numbers for the June quarter. The company's quarterly net profit came in at Rs 29 crore in June 2020, down over 94 percent from Rs 529 crore in June 2019.

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The stock surged as much as 15 percent to Rs 200 per share on BSE. It settled 14.3 percent higher at Rs 198.80 as compared to 0.22 percent or 86 points rise in BSE Sensex at 38,615.

The company's net sales also fell 38 percent to Rs 1,112 crore in Q1 from Rs 1,789 crore in the year-ago period. Zee’s total income in the period also tumbled 36.6 percent to Rs 1,338.41 crore, from Rs 2,112.03 crore a year ago. Its advertisement revenues dropped 64.5 percent to Rs 421.06 crore, from Rs 1,186.71 crore a year ago.

However, the company's domestic subscription revenues grew by 6.2 percent year-on-year (YoY) on a higher base, primarily led by ZEE5 subscription revenue.

Despite the poor performance, global brokerage house CLSA retained a BUY rating and a target price of Rs 255 per share.

"Zee advertising revenue was in line with expectations, down 66 percent YoY due to COVID-19 lockdowns, but Zee network viewership sharply improved to exceed pre-COVID-19 levels, led by resumed original content. Zee has improved disclosures and should emerge stronger post-COVID-19. At current valuations, the stock offers deep value, in our view," it said in a report.

Meanwhile, Morgan Stanley maintained an 'equal-weight' call on the stock but raised the target to Rs 150 per share from Rs 135 earlier. It added that the company's ad and subscription revenues were mostly in line with estimates.

Macquarie also an 'outperform' call on the stock with a target at Rs 250 per share. It raised FY21-23 EPS estimated by 3-5 percent.

As per the company, restrictions caused by the coronavirus on the business activities impacted the results for the current quarter.

“Like every other business around the world, Zee was also impacted by the pandemic during the first quarter and the impact has been both from the operational and financial perspective," Rohit Gupta, Chief Financial Officer of the company said.

He added that the company is expecting the ad revenues to grow in the second half of the year on the back of the festive season. He further noted that there was already some improvement seen in the ad revenue due to the lockdown relaxations.

First Published:Aug 19, 2020 1:24 PM IST