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Zee Entertainment Share – Stock analysis | Way ahead for Investors


Zee news Zee business Zee Tv Apart from this, there are 39 more brands Whose name starts with Zee And today we are going to talk about this company itself Which owns 39 channels And apart from this, has a lot of businesses And such a company Whose stock price, at one point, used to trade at around ₹600 And sometime ago, its stock price fell From ₹600 to ₹250 But in the recent times, it has gone up a little And a lot of news has come around this topic I, Jagdeep Singh, welcome you to the Groww channel Let us starts today's video So, if I talk about revenue streams, that where do they earn their revenue from So, their business revenue comes mainly from four places Firstly, Tv channels The tv channels that that they have, like I said they have 39 tv channels That operate internationally As you know that any television company gets their main revenue from the advertisement sector In the same way, the main revenue that Zee entertainment gets Comes from the advertisements that runs on their channel If I talk about the second revenue source, then Zee entertainment's second main revenue source Is its music production company A lot of music launched in India comes under the banner of Zee entertainment And whatever revenue that comes from that comes to the Zee entertainment company If I talk about the third revenue source, then the third main revenue source, there are a lot of movies in theatres That are made under the Zee banner And from the production to the distribution, whatever benefit they get, Is enjoyed by Zee entertainment Apart from this, you must be thinking that Zee has become an old company Whose main TV channels used to come But now, a lot of people have shifted from TV To online media When lot of normal people like you and I Watch a lot of content online Observing this, Zee also has reinvented themselves and launched a different brand Which mainly caters to this requirement And the name of this brand is Zee5 If we talk about the digital sector, then this was already very crowded But, Zee5 entered the sector and made its own special place And if I talk about data, then they in the first year itself Added 61 million subscribers And became India's fastest growing OTT service provider company Now, you must be thinking that Zee entertainment's business is really good And they reinvented themselves really well, and made a good entry in the digital sector So, what happened with this company That its share price, that used to trade at ₹600 at one point Fell to trade at ₹250, at one point Diworsification So, in the meaning of this term itself, the reason is hidden because of which The share of Zee entertainment came down Whenever the promoter, which means the owner of a company Starts a company And that company starts to make progress Then that promoter start thinking that he can run any business Then he feels that he should leave that sector And go into another sector and setup a business So that he can make his revenues, his profit and his company's market capitalization go up And in the process of doing this, the promoter's make a very big mistake which we call diworsification Consider that I am a promoter And I know really well how a mobile phone can be made and sold And I make a company that makes and sells mobile phones to the people And that company starts from 1,000 cr and increases to become 1 lakh cr Then I think that I learnt how to make mobile phones, but there is a boom in the infrastructure sector So I can establish a business in that sector as well This is where I make my first mistake Because my core competency is in the mobile making business I establish a new business and remove my attention from my core business And when my focus gets starts to get removed from there Then that company starts going down And the company that I entered in In the sector that I did not have much knowledge about In the sector that is not my core competency That company starts going down as well So as a promoter, I start suffering a big loss So this story, the same thing happened with the promoter of Zee entertainment So, Zee entertainment's promoters Whose main, core competency was in the entertainment sector Moved from that sector and started doing their business in the infrastructure sector But their core competency was not in that sector and they weren't able to perform well Because of which, their company which was running well, Zee entertainment also started facing problems Because of which, their promoters, had to pledge more than 21% of their holdings Pledge means they had to pawn their holdings and undertake debt And in the recent times, what happened was that the promoters weren't able to repay their debt Because of which The companies where they had pawned off their shares, those companies started selling off their shares If I talk about June 2019, The holdings that the promoters had in the company was around 35% But just a few months after that, 10% of their holdings Was sold to Invesco, which is an investment company After this, some news has come out in the recent times That the promoters of Zee entertainment are selling more than 16% of their holdings To make the repayment of their debt So, from, we get to learn that That we always say that diversification is very important And it is a very good concept as well And it comes to use for investors like us as well But diworsification, Is just as much a dangerous concept, as diversification is a good one Now let us talk about fundamental analysis How strong Zee entertainment is fundamentally as a company And how they have performed in the past few years And how they can perform in the coming time The sector that Zee entertainment operates in, there is a very important parameter in that sector Which we call, All India Viewership Share Which tells us that if 100 people watch tv, how many percent of the people watch a particular tv brand So, if we talk about Zee entertainment So, this percent, last year was 18% Which has increased this year to become 197% Which means that in the matter of viewership, Zee entertainment has improved itself and can improve themselves more in the coming time Now let us talk about revenue That in the last few years, how much has Zee entertainment's revenue increased As you can see on the screen, that Zee entertainment's revenue in the financial year 2015 Was around 48 hundred cr Which kept on increasing and in the financial year 2019 It increased to become almost 8 thousand cr So, in terms of revenue, Zee entertainment has made a lot of improvements in the past few years Now you have an idea about its revenue, that its revenue has improved a lot Now you must be wondering from where and how much revenue do they get I will give you a little rough estimate As you can see on the screen, how the revenue break up is of Zee entertainment So, from their total revenue, 64% of their total revenue Comes from the advertisement business These advertisement are run on their main television This revenue comes from there Apart from that, 29% of their revenue is their subscription revenue Subscription revenue means The OTT services that they have started And the new subscribers that come there, have to pay subscription charges And apart from that, a small portion of 7% Comes from other sales and services Now, let us talk about debt So if I talk about debt, then the debt on them is a little more than 700 cr Now you must be confused that I told you in the beginning That they have a big problem of debt So you should not be confused here Because the main problem of debt, is with the promoters But for Zee entertainment as a company, there isn't much problem of debt Because the promoters took debt for themselves, to run their new business Because of which they had to sell their holdings But Zee entertainment as a company The debt level they have, is not that big that they won't be able to fulfill it So, what do we get to learn from this? So, the most important thing that we get to learn from this is Is that the promoter, who is the owner of the company and the company itself Are two separate entities And if one of them has a debt problem, it doesn't mean that the other has that big a debt problem as well Which is what happened in this case The main debt problem that happened here was because on the promoters But not on the company So, as an investor what should we see in this company? So, the first thing you should see that in the coming time, how this company expands itself in the digital segment For example, they have already got their new brand in the digital segment called Zee5 And in the first year itself they have added 61 million subscribers to this brand Its true that the amount of subscribers is pretty good But it's not enough that they can compete with brands like Amazon Prime and Netflix And apart from this, the second very important point we should see as an investor is that, the company's internal synergies Are being utilized efficiently and well You must be wondering what this means As an investor, when we are interested in a company we see how its internal synergies are Consider that a company sells a product A and it has another segment B So how does it sell its products In the same way, in the case of Zee entertainment That it runs 39 channels Apart from this, it creates content in 12 different languages So they have a really good opportunity That they can use the same content in a digital platform And that content can be used in different channels as well But the coming time can only tell us How well they can streamline their internal things Which they can use in their cost cutting as well And apart from this, they can expand their revenue and net profit So, friends, if you liked this video, press that like button and comment and let us know What you think will happen with Zee entertainment in the coming days Apart from that, we do not give the recommendation of buying or selling in any company We make all the videos purely for educational purposes We put up 4-5 videos every week on financial knowledge So that you can become an informed and intelligent investor Apart from that, if you haven't yet subscribed to this channel, please subscribe Happy investing!

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