Media, Entertainment Q3 Results Preview - A Quarter Of Mixed Bag: Prabhudas Lilladher

Prabhudas Lilladher Report

Media: After a blockbuster Q2 FY24, industry wide box office collections declined 22% QoQ to ~Rs 25.6 billion in Q3 FY24E. Box office collections were weaker on sequential basis due to-

1. high base,

2. paucity of content in first 45 days and

3. cricket world cup.

Accordingly, we expect PVR-Inox Ltd. to report modest performance with footfalls of 36 million (~24.5% occupancy) and pre-Indian Accounting Standard Ebitda margin of 11.1%.

On broadcasting side, ZEE Entertainment Enterprises Ltd.’s performance is likely to be impacted by continued weakness in ad-environment exacerbated by cricket world cup (shift of ad-spends from GEC towards sports).

We expect domestic ad-revenues to decline 2.3% YoY to Rs 9.9 billion with an Ebitda margin of 10.1%.

Entertainment: Levy of GST on full bet value, persistent headwinds in Kiddopia and ad-tech business coupled with modest performance from Nodwin is likely to slow down the growth trajectory for Nazara Technologies Ltd.

However, we expect Ebitda margin to improve to 14.6% due to better cost control. Post recent fund raise, Nazara has cash balance of Rs 13.3 billion and we believe capital allocation decisions from hereon will be key to re-rating.

Top pick:

Despite the delay in merger, ZEE Entertainment remains our preferred pick in the media and entertainment space as we expect positive outcome from ongoing negotiations.

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