PL Capital Maintains “BUY” on Zee, Sees Upside as Promoter Stake Rises and ZEE5 Losses Narrow
- 8th July 2025
- 12:00:00 AM
- 3 min read
Mumbai | July 8 – PL Capital has maintained a BUY rating on Zee Entertainment Enterprises (ZEE) with a revised target price of ₹179 (up from ₹137), citing improving execution comfort as the promoter group hikes its stake, narrowing digital losses, and clear margin expansion visibility in FY26.
The brokerage expects ZEE’s EBITDA margins to expand to 18-20% in FY26, driven by ZEE5’s path to break-even and a gradual recovery in advertising revenue despite a challenging environment.
“Preferential allotment to promoters lowers execution risk around ZEE’s FY26 aspirations while cost discipline and digital investments position it for re-rating,” said Jinesh Joshi, Senior Analyst, PL Capital.
Promoter Stake Hike Enhances Confidence
ZEE plans to issue ~169.5 million fully convertible warrants at ₹132 per share, raising ₹22.4 billion and increasing the promoter stake from 4% to 18.3% over 18 months.
Proceeds will fund new initiatives, including short-form content apps, edutainment, sports licensing, live content expansion, and 3D content development, while ₹7.1 billion is allocated for M&A, diversifying revenue streams beyond linear TV.
“Deploying capital into new businesses while preserving content strength will be crucial for re-rating,” PL Capital noted.
ZEE5 to Turn the Corner
ZEE’s digital platform ZEE5, which reported ₹5,480 million EBITDA losses in FY25, is targeting EBITDA break-even in FY27, with losses reducing to ₹2,108 million in FY26 as it expands its original content library and ARPU-focused offerings without compromising on content quality.
“ZEE5’s narrowing losses and revenue-enhancing strategies align with ZEE’s focus on sustainable digital growth,” the report said.
FY26 Targets and Segment Focus
For FY26, ZEE aims to:
- Achieve TV viewership share of ~17.5% (recent data already exceeding target)
- Grow advertising revenues by 8-10%
- Maintain EBITDA margins at 18-20%
- Achieve FCF to PAT >1.2x
PL Capital highlighted ZEE’s launch of 30 new shows and the return of Z Anmol to FTA, which should aid ad revenue recovery in H2FY26.
Financial Snapshot:
| Metric | FY25 | FY26E | FY27E |
| Sales (₹ Cr) | 8,294 | 8,863 | 9,588 |
| EBITDA Margin | 14.40% | 17.90% | 19.80% |
| PAT (₹ Cr) | 770 | 1,039 | 1,349 |
| EPS (₹) | 8 | 10.8 | 11.9 |
Outlook: Positioned for Structural Re-Rating
Post its Sony merger fallout, ZEE has intensified cost optimisation—reducing content and employee costs by over 10% in FY25, which supported a 390 bps improvement in EBITDA margins, though muted ad growth limited full leverage benefits.
PL Capital expects a 7.5% sales CAGR between FY25-FY27, driven by ZEE5’s narrowing losses, digital revenue growth, and stabilising ad revenues.
“ZEE’s strategic capital deployment, cost control, and steady digital expansion position it well for a sustainable earnings trajectory and valuation re-rating,” PL Capital concluded.
For detailed segment commentary, updated rating rationales, and complete financial forecasts, click here to view PL Capital’s full Zee report.
PL Capital
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
