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ZEEL beats market estimates, Q2 PAT up 26% to Rs 236 cr

MUMBAI: Subhash Chandra-promoted Indian media conglomerate Zee Entertainment Enterprises Ltd (ZEEL) has once again beat market expectations, posting a healthy 26.03 per cent jump in net profit for the quarter ended 30 September 2013.

ZEEL Q2The company has reported a consolidated net profit of Rs 236.31 crore ( Rs. 2.36 billion) during the quarter compared to Rs 187.49 crore ( Rs 1.87 billion) a year ago. This is aided by a 15.5 per cent jump in the company’s revenue and a mere 7.5 per cent increase in expenses during the quarter.

ZEEL’ consolidated operating profit (EBITDA) for the quarter was up 43 per cent to Rs 310.5 crore ( Rs. 3.11 billion). EBITDA margin stood at 28.2 per cent. The company said that non-sports EBITDA margin was higher at 34.9 per cent.

“It is commendable that despite the launch of two new channels (&Pictures and Anmol) and fresh hours of programming, ZEEL has been able to exhibit higher than expected margins in the non-sports business,” said a media analyst on condition of anonymity.

Total revenue during the quarter under review stood at Rs 1,101.3 crore ( Rs 11.01 billion) compared to Rs 953.5 crore ( Rs 9.54 billion) in the corresponding quarter of the previous fiscal.

Advertising revenue for the quarter stood at Rs 583.3 crore ( Rs. 5.83 billion), up 10.5 per cent. ZEEL said that its ad revenue growth, without sports business, is 20 per cent.

ZEEL chairman Subhash Chandra said, “The media and entertainment industry growth is marginally impacted by the overall slowdown of the economy. The television sector, in particular, continues to grow on the back of better subscriber growth linked to increasing digitisation. There was an apprehension about the trends in advertising spends given the overall weakness in the economy, but the television media industry has continued to grow in double digits during the second quarter. ZEEL has outpaced the industry advertising revenue growth once again.”

During the first half, and particularly in Q2, the FMCG segment has continued to do well. Other sectors which spent on advertising included automobile sector and consumer durables. However, it has seen weakening in advertising from the banking and financial services, DTH and telecom sectors.

Beginning next quarter, the company will see a reduction in advertising inventory across the network in line with TRAI regulations. “We are in the process of negotiations with advertisers and are confident that this will not have any major impact on revenue monetisation,” ZEEL managing director and CEO Punit Goenka said.

ZEEL’s subscription revenues grew 16 per cent to Rs 458.1 crore ( Rs 4.58 billion) compared to Rs 395 crore ( Rs 3.95 billion) in the previous year. While domestic subscription revenues stood at Rs 335 crore ( Rs 3.35 billion), up 19.3 per cent, international subscription income was at Rs 123.1 crore ( Rs 1.23 billion), up 7.9 per cent from the year-ago period.

ZEEL’s total expenses were under control and increased by just 7.5 per cent to Rs 790.8 crore ( Rs 7.91 billion). Operating cost for the quarter saw a 5.2 per cent rise to Rs 504.1 crore ( Rs 5.04 billion), while employee cost rose 13.6 per cent to Rs 99.2 crore ( Rs 992 million).

As of 30 September 2013, ZEEL has a gross debt of Rs 19.1 crore ( Rs 191 million) and gross cash of Rs 1390 crore ( Rs 13.90 billion).

The promoter pledging of shares has increased from 15.1 per cent at the end of Q1 to 18.8 per cent in the second quarter of FY14.

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