Zee Entertainment Enterprises (Z IN) – Q2FY27 Result Update – High content and A&P spend dents margins – BUY
Published on 01 Nov 2026
We cut our EPS estimates by 4%/2% for FY28E/FY29E as we fine-tune our content cost and A&P spend assumptions. Z IN reported weak operational performance with EBITDA margin of 3.2% (PLe 3.4%) primarily due to an adverse advertising environment coupled with elevated programming and A&P spends on account of acquisition of FIFA rights. Excluding the impact of higher spends, EBITDA margin would have been in the mid-to-high single digit band. Given A&P spends would normalize post FIFA screening and subscriber retention rate is trending in the region of 35-40% (aids subscription business) we expect margin recovery from 2HFY27E. Led by healthy traction in digital business and expected recovery in ad-environment, we expect 7% sales CAGR over the next 3 years with EBITDA margin of 7.2%/13.2%/14.3% in FY27E/FY28E/FY29E. Retain BUY with a TP of INR101 (12x Sep-28E EPS; earlier 13x).
