BIG BOSS
VIKAS PARSHURAM SAMWATSARE
SHORT TIME AND LONG TIME STOCK MARKET TIPS
Buy Zee Entertainment Enterprises Ltd For Target Rs.273
We initiate coverage on Zee Entertainment Enterprises Ltd (ZEEL) as a BUY with a Price Objective of `273. At CMP of `184, the stock is trading at 26.3x and 18.4x its estimated earnings for FY13 & FY14 respectively, representing a potential upside of ~48% over a period of 24 months. Expected surge in subscription revenues due to the new digitization reforms, higher than expected ad-revenue growth and enhanced reached from the Media Pro venture should help revenues grow at a CAGR of 15.7% to `4,711.3 crore by FY15 from the current FY12 revenues of 3,040.5 crore. Further, sharp decline in carriage costs going forward and curtailed losses on the sports business should help lift margins and improve earnings to `1,296.8 crore from the current `589.2 crore over the forecast period FY13-15 (CAGR of 30.2%).
Digitisation to provide fillip to ZEEL’s subscription revenues
As reported subscriber numbers increase post digitization, subscription revenues of the broadcasters are also expected to increase substantially. Given ZEEL’s superior domestic subscription revenue share (as compared to peers), ZEEL is expected to be one of the biggest beneficiaries. We expect ZEEL’s domestic subscription revenue to grow at a CAGR of 31.4% to `2,090.5 crore in FY15 from `922.2 crore in FY12 on the back of better content quality and optimized content distribution through Zee Turner and MediaPro (its distribution ventures). Moreover, we expect international subscription revenues to aid top line and grow steadily at a CAGR of 2.8% to `437.4 crore from `402.2 crore over the period of FY12 to FY15 on the back of enhanced investments to improve the quality of content besides launching channels with local flavor. Lastly, ZEEL’s carriage fees is set to crash, albeit in a phased manner, to `108.9 crore (3.7% of total cost) over the period of 3 years till FY15 from the current `211.6 crore on the back of continued synergy from its distribution venture and elimination of demand-supply mismatch (increase in channel carrying capacity from ~90 to ~600 channels).
Valuation
We initiate coverage on Zee Entertainment Enterprises Ltd (ZEEL) as a BUY with a Price Objective of `273 representing a potential upside of ~48% over a period of 24 months. At CMP of `184, the stock is trading at 26.3x and 18.4x its estimated earnings for FY13 & FY14 respectively. Historically, the stock has traded at an average of 20.7x one year forward earnings and we expect ZEEL to command similar multiples going ahead and accordingly we have valued ZEEL at 20x to FY15 EPS.
Expected surge in subscription revenues due to the new digitization reforms, higher than expected ad-revenue growth and enhanced reached from the Media Pro venture should help revenues grow at a CAGR of 15.7% to `4,711.3 crore by FY15 from the current FY12 revenues of `3,040.5 crore. Further, sharp decline in carriage costs going forward and curtailed losses on the sports business should help lift margins and improve earnings to `1,296.8 crore from the current `589.2 crore over the forecast period FY12-15 (CAGR of 30.2%).
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Buy Tv Today For Target Rs. 88 94 & 100
The stock has been in a long term downtrend since Dec’08 forming a series of lower highs and lows.
* The counter at the lower support range near its previous Nov’08 lows formed a Complex Bullish Inverted Head & Shoulder pattern and has managed to give a bullish breakout. The right shoulder formed multiple higher lows which hinted for an upside breakout.
* The RSI indicator has exceeded the ascending triangle pattern which confirms a trend reversal and possibility for the prices to test the upper resistance line in the medium term.
* There was series of positive divergence observed in RSI which indicated an impending trend reversal on cards. The MACD in daily chart after a positive divergence in histogram gave a bullish crossover which formed the Head of the Pattern. Both the momentum indicators suggested a rally which got confirmed from the pattern breakout.
* As a major reversal pattern, the Head and Shoulders Bottom forms after a downtrend, and its completion marks a change in trend. The RSI has managed close above resistance of 60 levels which has indicated a bullish range shift.
* The counter has also managed to close decisively above the 23.6% retracement level after 2011 which is bullish.
* The advance off the right shoulder observed a large expansion of volumes. The strength behind the move indicated that a significant low has been formed. The advance from the right shoulder occurred with big candle accompanied with above average volume which validates the bullish breakout.
**********************************************************************************
VIKAS PARSHURAM SAMWATSARE
SHORT TIME AND LONG TIME STOCK MARKET TIPS
Buy Zee Entertainment Enterprises Ltd For Target Rs.273
We initiate coverage on Zee Entertainment Enterprises Ltd (ZEEL) as a BUY with a Price Objective of `273. At CMP of `184, the stock is trading at 26.3x and 18.4x its estimated earnings for FY13 & FY14 respectively, representing a potential upside of ~48% over a period of 24 months. Expected surge in subscription revenues due to the new digitization reforms, higher than expected ad-revenue growth and enhanced reached from the Media Pro venture should help revenues grow at a CAGR of 15.7% to `4,711.3 crore by FY15 from the current FY12 revenues of 3,040.5 crore. Further, sharp decline in carriage costs going forward and curtailed losses on the sports business should help lift margins and improve earnings to `1,296.8 crore from the current `589.2 crore over the forecast period FY13-15 (CAGR of 30.2%).
Digitisation to provide fillip to ZEEL’s subscription revenues
As reported subscriber numbers increase post digitization, subscription revenues of the broadcasters are also expected to increase substantially. Given ZEEL’s superior domestic subscription revenue share (as compared to peers), ZEEL is expected to be one of the biggest beneficiaries. We expect ZEEL’s domestic subscription revenue to grow at a CAGR of 31.4% to `2,090.5 crore in FY15 from `922.2 crore in FY12 on the back of better content quality and optimized content distribution through Zee Turner and MediaPro (its distribution ventures). Moreover, we expect international subscription revenues to aid top line and grow steadily at a CAGR of 2.8% to `437.4 crore from `402.2 crore over the period of FY12 to FY15 on the back of enhanced investments to improve the quality of content besides launching channels with local flavor. Lastly, ZEEL’s carriage fees is set to crash, albeit in a phased manner, to `108.9 crore (3.7% of total cost) over the period of 3 years till FY15 from the current `211.6 crore on the back of continued synergy from its distribution venture and elimination of demand-supply mismatch (increase in channel carrying capacity from ~90 to ~600 channels).
Valuation
We initiate coverage on Zee Entertainment Enterprises Ltd (ZEEL) as a BUY with a Price Objective of `273 representing a potential upside of ~48% over a period of 24 months. At CMP of `184, the stock is trading at 26.3x and 18.4x its estimated earnings for FY13 & FY14 respectively. Historically, the stock has traded at an average of 20.7x one year forward earnings and we expect ZEEL to command similar multiples going ahead and accordingly we have valued ZEEL at 20x to FY15 EPS.
Expected surge in subscription revenues due to the new digitization reforms, higher than expected ad-revenue growth and enhanced reached from the Media Pro venture should help revenues grow at a CAGR of 15.7% to `4,711.3 crore by FY15 from the current FY12 revenues of `3,040.5 crore. Further, sharp decline in carriage costs going forward and curtailed losses on the sports business should help lift margins and improve earnings to `1,296.8 crore from the current `589.2 crore over the forecast period FY12-15 (CAGR of 30.2%).
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Buy Tv Today For Target Rs. 88 94 & 100
The stock has been in a long term downtrend since Dec’08 forming a series of lower highs and lows.
* The counter at the lower support range near its previous Nov’08 lows formed a Complex Bullish Inverted Head & Shoulder pattern and has managed to give a bullish breakout. The right shoulder formed multiple higher lows which hinted for an upside breakout.
* The RSI indicator has exceeded the ascending triangle pattern which confirms a trend reversal and possibility for the prices to test the upper resistance line in the medium term.
* There was series of positive divergence observed in RSI which indicated an impending trend reversal on cards. The MACD in daily chart after a positive divergence in histogram gave a bullish crossover which formed the Head of the Pattern. Both the momentum indicators suggested a rally which got confirmed from the pattern breakout.
* As a major reversal pattern, the Head and Shoulders Bottom forms after a downtrend, and its completion marks a change in trend. The RSI has managed close above resistance of 60 levels which has indicated a bullish range shift.
* The counter has also managed to close decisively above the 23.6% retracement level after 2011 which is bullish.
* The advance off the right shoulder observed a large expansion of volumes. The strength behind the move indicated that a significant low has been formed. The advance from the right shoulder occurred with big candle accompanied with above average volume which validates the bullish breakout.
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