Target Price: ₹131
Current Market Price (CMP): ₹104.80
In the second quarter of fiscal year 2026, Zee Entertainment Enterprises Ltd (ZEEL) experienced a slight year-over-year decline in overall revenue of approximately 2%. This drop was primarily attributed to an 11% decrease in advertising revenue, influenced by continued soft spending in the fast-moving consumer goods (FMCG) sector and adverse macroeconomic conditions. However, this downturn was somewhat offset by a 5% growth in subscription revenue on a year-over-year basis, driven by ongoing momentum in the streaming service ZEE5.
On the profitability side, increased marketing expenditures related to the relaunch of the Kannada and Bangla General Entertainment Channels (GEC) contributed to a significant EBITDA contraction of 808 basis points year-over-year. It’s important to note that a portion of these expenses is viewed as one-off. Looking forward, the company maintains a cautiously optimistic outlook regarding the revival of advertising demand, bolstered by favorable seasonal trends and improving consumer spending patterns.
ZEE5 has shown robust growth and is progressing towards breakeven, thanks to stringent cost management and an enhanced focus on regional-language content. Nonetheless, overall growth remains sluggish, with a recovery anticipated as the advertising landscape improves in the latter half of fiscal year 2026.
Given the current stock prices, it appears that market sentiment is more pessimistic than what the underlying fundamentals indicate. Thus, based on revised projections, a Buy rating on ZEEL is reiterated, with a target price set at ₹131, reflecting approximately 20 times the estimated earnings for fiscal year 2027.
Published on October 24, 2025
