1. 4QFY2010 Result Update I Media
April 21, 2010
Zee News NEUTRAL
CMP Rs18
Performance Highlights Target Price -
Zee News (ZNL, Ex-Regional GECs) reported a Top-line of Rs60.1cr, PAT of Investment Period -
Rs2.1cr and Operating Margin of 6.5%. The numbers are strictly not
comparable yoy owing to the demerger of Regional GECs to Zee Stock Info
Entertainment (ZEEL) during the quarter. The management has indicated that
Sector Media
it is not planning any new launches/initiatives for the next two quarters, and
would focus purely on consolidating its current news operations. We Market Cap (Rs cr) 428
recommend a Neutral view on the stock, due to a lack of clarity on its
Beta 0.6
financials, limited growth triggers and fully-priced in valuations (based on the
EV/Sales multiple). 52 WK High / Low 77/15
Limited financial disclosure: After the de-merger of Regional GECs, the ZNL Avg. Daily Volume 756,973
management has not disclosed comparable financials or complete balance Face Value (Rs) 1
sheet details of the residual business. However, during the Concall, the
management indicated limited details about the residual business. Zee News BSE Sensex 17,473
(ZNL, Ex-Regional GECs) reported a Top-line of Rs60.1cr, PAT of Rs2.1cr and Nifty 5,245
Operating Margin of 6.5%. ZNL registered Rs41.7cr Advertising revenue and
Rs17.1cr Subscription revenue from the residual business. The existing news Reuters Code ZEEN.BO
operations, comprising of Zee News, Zee Business, Zee 24 Taas and 24
Bloomberg Code ZEEN @IN
Ghanta, recorded a 30% yoy growth in advertising revenue for the quarter.
The residual business has lower profitability, partially due to losses in Zee Shareholding Pattern (%)
Tamizh (Tamil GEC) and losses from two newly launched news channels – Zee
News UP and Zee 24 Ghantalu (Telugu News). In terms of Balance sheet Promoters 54.1
details, the Networth is Rs162cr, Gross Debt is Rs168cr, Cash is Rs8.5cr and MF/Banks/Indian FIs 29.1
Net Debt is Rs~80cr (Due to investments in interest bearing instruments).
FII/NRIs/OCBs 8.5
Transferred R-GECs post Rs404cr Top-line and Rs135cr Bottom-line for Indian Public 8.3
FY2010: In ZEEL’s result announcement for 4QFY2010, the company has
consolidated the results for Regional GECs for the current quarter. According #Abs. (%) 3m 1yr 3yr
to the company, the Regional GECs business (transferred to ZEEL) reported a
Sensex 2.5 60.3 25.7
revenue of Rs404.3cr and EBITDA of Rs126.1cr (31.1% OPM), against our
estimates of Rs435cr revenue and EBITDA of Rs135cr (31% OPM).
Zee News (71.5) (51.7) (56.2)
Fair Value range at ~Rs18-22: Since the company has not disclosed the # Not comparable due to de-merger of R-GECs
appropriate full year financial details on the residual business, we believe that on April 15, 2010
it is difficult to ascertain the right value of the stock. However, we estimate
ZNL’s residual business revenue for FY2010E at Rs230cr. Based on a modest
CAGR of 15% in the Top-line during FY2010-12E, we expect ZNL to post
Rs305cr revenue in FY2012E. Based on ~1.7x (Base case) to 2x (Bull case)
EV/Sales Multiple (comparing it to TV Today) and adjusted for Rs80cr Net
debt, we have arrived at a fair value range of ~Rs18-22.
Upside risks to our estimates include: 1) Any positive surprises in the annual
report after complete financial disclosure, 2) Significant up-tick in Operating
Margins, and 3) New channel launches or entry into new genres (less likely in
near-term)
Anand Shah
Note: Projections/Financials not included due to lack of details after the Tel: 022 – 4040 3800 Ext: 334
de-merger. E-mail: anand.shah@angeltrade.com
Chitrangda Kapur
Tel: 022 – 4040 3800 Ext: 323
E-mail: chitrangdar.kapur@angeltrade.com
1
Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539
3. Zee News I 4QFY2010 Result Update
Research Team Tel: 022-4040 3800 E-mail: research@angeltrade.com Website: www.angeltrade.com
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Disclosure of Interest Statement ZNL
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock No
3. Angel and its Group companies’ Directors ownership of the stock No
4. Broking relationship with company covered No
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April 21, 2010 3
