ZEEL flagship Zee TV further extends its lead in pay GEC space; regional portfolio also on an uptrend: Based on viewership data from the BARC website, Zee TV further strengthened its position among pay Hindi GECs in May 2018; Zee TV had a ‘relative’ viewership share of 26.4% (up 183 bps m-o-m), while market share of 2 Colors declined for the fifth straight month, to 19.1% in May vs. 21.4% in April and a peak of 24.6% in Dec-17. In the free-to-air [FTA] domain in rural markets, Zee Anmol maintained its pole position among Hindi GECs—weekly viewership volumes or TVMs during May were 29-42% ahead of the 2 channel.
In the Hindi movies genre, Sony Max maintained its lead position, whereas Zee Cinema didn’t feature among Top 5 in just one of the five rating weeks in May. Zee’s performance in Regional GEC space was robust Marathi—clear leadership maintained [relative share up 175bps m-o-m to c.58%]; Bangla narrowed gap vis-à-vis the channel; Kannada—maintained 2 rank behind Colors; Telugu— steady #2 maintained behind Star’s MAA TV; Tamil—maintained 3 rank in May but exited at 2 for the first time in the last four months. Zee Tamil had an average share of 18.3% in May, within striking distance of Star Vijay at 19.0%. Separately, Zee is gearing up for its Malayalam entry (only southern market where it’s absent), with a GEC launch likely by end 2QFY19. Net-net, continued across the board improvement in TV ratings augurs well for Zee’s FY19 ad revenue growth, aided by ongoing macro-driven ad-spend recovery, led by the FMCG sector.
Flagship Tamil GEC, Sun TV, continued to see erosion in viewership share (average of 42.4% in May vs. 44% in April). Telugu GEC remained stuck at 4 with a 20.4% share.
We tweaked down GTPL target price to `215 (Jun-19) post the release of FY18 consolidated results. GTPL remains the best run and the most undervalued video business among listed MSOs—trading at EV/EBITDA of 4.6x and a P/E of 11.4x on our FY19 estimates. Zee shares were down 5.4% in May, while Sensex rose 0.5%. After a rather muted c.8% EBITDA growth in FY18, we expect growth rate to surge in FY19, despite higher investments—original content for OTT platform (Zee5), movie production, catalogue build-up for launch of movie channels in regional languages and upcoming Malayalam GEC launch.