After a long time, promoters of ZEE Entertainment Enterprises Ltd (ZEEL) increased their stake in the company bought 27 lakh shares worth Rs 27 crore through open market purchase. This amounted to an additional 0.29 per cent stake in ZEEL. Nuvama said the quantum is decent and a positive indicator for the company.
"Promoter’s stake has moved to 4.28 per cent (earlier 3.99 per cent). The quantum of this acquisition shows belief in the long-term prospects and growth potential of the company. This shall boost the confidence of minority investors," Nuvama said.
ZEEL shares are down 21 per cent in 2025 so far and 39 per cent in the past one year.
Nuvama said ZEEL's subscription revenue remained strong, with seven consecutive quarters of expansion. Ad revenue are currently weak but are seen recovering from Q2FY26 onwards, led by urban demand recovery and higher gross margin for FMCG companies due to weak crude oil prices.
"The stock is currently trading at 10x one-year forward P/E versus a 14 times one-year average indicating oversold levels and attractive valuation," Nuvama said.
In Q4FY25, ZEEL expects to make good strides on the margin front. Key focus growth area will be investment, movie launches and revenue. The company aims to reach Ebitda margin of 18–20 per cent by FY26, Nuvama said.
"The next tranche of FCCB is slated for August 2025. Subscription revenue growth shall continue for a couple more quarters along with further price hikes. Rural local advertisement spends have improved. The language market is making a comeback and retail is large thereof," it said.
Nuvama said subscription revenue for ZEEL rose 6.6 per cent YoY in Q3, driven by a pickup in Zee5 subscription. Subscription revenue growth (high-single digit) should continue for a couple more quarters along with price hikes in the linear business and increase in subscriber base for the digital business, it said.
On Ad revenues, it said ZEEL continued to face the heat from a subdued macro environment with the urban slowdown particularly affecting FMCG companies.
"We reckon ad spends shall improve for these companies in FY26 with falling crude prices increasing the wallet share towards ad spends. Zee has reduced its dependence on national brands. FMCG still contributes 60 per cent, but within that chunk, local FMCG is attaining a reasonable size and these locals are willing to pay a 50 per cent premium over national counterparts," it said.
As per the CEO, the companies are going towards e-commerce and Q-commerce channels for performance, but television is a 90 crore medium and an essential tool for brand building, Nuvama noted him as saying.