Zee reported 16%, 36% and 32% y-o-y growth in ad revenues, EBITDA and adjusted net profit. The near-term outlook for TV industry is a tad weak given FMCG-led softness in ad spends, delays in phase III-IV digitization and uncertainty around TRAI’s draft tariff order. Regardless, Zee is charting its path to long term growth outperformance by augmenting content capabilities, enhancing regional footprint and expanding in new verticals and markets and more importantly executing with solid profitability and capital allocation. We trim FY2018-19E EPS by 4% as we cut domestic subscription revenue forecast. Roll-over to Sep-16 and maintain TP. BUY.
Zee reported 15.7% yoy growth in ad revenues powered by industry growth (12-13%), India West Indies cricket (1-2%), and market share gains in regional genres adjusted for weakness of Zee TV (1-2%). Domestic subscription revenues grew 25% aided by some catch-up pertaining to 1Q. EBITDA margin improved 290 bps y-o-y to 28.9%; EBITDA grew 36% y-o-y partly led by broad-based improvement in profitability including sports and moderation in losses of &TV. Net profit excluding impact of RPS at `3.3 billion (+32% y-o-y) was marginally below our estimate due to higher depreciation. Sports business reported operating loss of `168 million as against our estimate of break-even.