Zee Entertainment Enterprises (Z IN) – Q2FY26 Result Update – Margin mirage – BUY
Published on 17 Oct 2025
Z IN reported weak set of numbers as top-line declined 1.6% YoY to Rs19,692mn (PLe Rs19,494mn) with an EBITDA margin of 7.4% (PLe 6.0%). EBITDA margin was at a 10-quarter low led by higher A&P spends (18.7% of sales) amid new channel launches in Kannada & Bangla markets. Nonetheless, viewership share is showing signs of improvement (17.8% in 2QFY26) while digital business is on the verge of EBITDA break-even. We expect margin recovery to be back-ended led by improvement in ad-environment and mean reversion in A&P spends. We expect revenue CAGR of 5.5% over the next 3 years with EBITDA margin of 12.3%/18.4%/19.5% in FY26E/FY27E/FY28E. Backed by sharp earnings recovery and attractive valuations (9.5x/8.2x our FY27E/FY28E EPS) we maintain BUY with a TP of Rs161 (14x FY27E EPS; no change in target multiple).
