Q2 Earnings: Zee Entertainment’s Profit Falls Due To Base Effect

Zee Entertainment Enterprises Ltd.’s operational performance beat analysts’ estimates in the quarter ended September even as its profit declined due to exceptional gains in the year-ago period.

Net profit fell 38 percent year-on-year to Rs 386 crore in the September quarter, the media company said is an exchange filing on Oct. 9. That compares with the Bloomberg consensus estimate of Rs 400 crore. The company had reported an exceptional gain of Rs 134.6 crore in the year-ago period due to sale of its sports broadcast business.

The company’s revenue rose 24.5 percent year-on-year to Rs 1,976 crore in the September quarter. That’s higher than the Rs 1,848-crore consensus estimate.

“Zee entertainment has witnessed a strong growth across business verticals and we expect a high teen growth in the coming two quarters,” Managing Director and Chief Executive Officer Punit Goenka told BloombergQuint in an interaction a day after the earnings were announced.

The operating income, or the earnings before interest, tax, depreciation and amortisation, rose 37 percent year-on-year to Rs 653 crore in the July-September period, against Rs 577-crore estimated. The operating margin expanded to 33 percent from 30.1 percent a year ago. That compares with 31.2 percent forecast by analysts.

“The company reported better-than-expected advertisement revenue, subscription revenue and operating margins,” Angel Broking’s Mayuresh Joshi said. “The management also sounds confident on its digital platform—Zee5’s growth.”

The company aims to make Zee5 the country’s top digital platform in the next 12 months, Goenka said. Zee5, according to him, became the second digital entertainment platform with about 4.13 crore active monthly users in September and an average daily time spend of 31 minutes.

The media company’s advertising revenue rose 22.7 percent from the year-ago period to Rs 1,210.6 crore in the July-September period. Its overall subscription revenue rose 21.3 percent year-on-year to Rs 608.2 crore.

Shares of Zee Entertainment today closed 1.05 percent higher at Rs 464 apiece on the BSE. The stock declined nearly 18 percent so far this year compared to a 2.1 percent fall in the benchmark NSE Nifty 50 Index.

(Updates an earlier version with the management’s comments)