Zee thumps St with 41% profit growth

Zee Entertainment Enterprises Ltd, India’s leading media company, has reported a 40.5% year-on-year (yoy) growth in net profit for the third quarter at Rs193.3 crore, lifted by a strong surge in advertising and subscription revenues.

Advertising and subscription revenues during October-December grew 28.8% and 25.6% yoy to Rs509.4 crore and Rs409.8 crore, respectively.

Subhash Chandra, chairman, Zee, said the first three quarters of this fiscal have been good for the company.  “With one quarter to go, we are looking forward to a strong growth this year. The highlight for this quarter is the strong growth momentum in advertising revenues, despite subdued spends. The performance illustrates that our investments in content are yielding good returns,” said Chandra.

The company’s consolidated operating revenues at Rs938.8 crore for the third quarter rose 26.3% over the year-ago period.

Operating profit, or earnings before interest, tax, depreciation and amortisation (Ebitda), for the quarter stood at Rs261.1 crore. Ebitda margin was 27.8%, while net profit margin stood at 20.6%.

The company feels digitisation will bring in a transformational change in Indian television industry benefit all stakeholders.
Punit Goenka, managing director and chief executive officer, Zee, said, “Our subscription revenues during the third quarter are the highest ever, and with digitisation rollout they will improve in the medium term.”

While the Zee network viewership witnessed a successful mix of new and returning shows, the management is confident of the next 12 months and will continue to invest in new content and channels.

“These investments will have an impact on our operating margins in the short term, but will enhance our performance in the medium term as well,” said Goenka.

The company trumped the overall industry, too.

Atul Das, chief strategy officer, Zee, said, “While the overall industry is estimated to have grown 9-10%, our performance in the first nine months has been 27% growth over the same period last year,” said Das.

Phase II and III of digitisation will benefit Zee and its margins will continue to be healthy at 26-27%, said Ankit Kedia, analyst, Centrum Broking. With more than Rs1,100 crore of cash, the company would look at new investment opportunities, he said, citing the new initiatives, including children’s channel ZeeQ and Ditto TV.