What Is Driving Keynote Capital’s Buy Call On Zee Entertainment Despite Weak Ad Revenue?
Keynote Capital has reiterated its Buy rating on Zee Entertainment Enterprises Ltd (ZEEL) with a target price of ₹131, reflecting confidence in the company’s long-term growth potential despite near-term advertising headwinds. The brokerage expects FY26 recovery supported by cost control and content-led strategies, especially through ZEE5’s digital momentum.
In Q2 FY26, Zee Entertainment reported a 2% YoY decline in overall revenue, primarily due to an 11% fall in advertising income amid weak FMCG spending and subdued macroeconomic trends. However, the impact was partly offset by a 5% rise in subscription revenue, driven by continued traction in ZEE5’s paid users.
For tactical opportunities in the entertainment sector, refer to our current Nifty Option Tip and position with our sectoral insights.
On the profitability front, marketing expenses surged as the company relaunched its Kannada and Bangla GEC channels. This led to an EBITDA contraction of 808 bps YoY. However, these costs are one-off in nature, and management expects profitability to improve with festive-led ad recovery in H2 FY26.
| Metric | Q2 FY26 | YoY Change |
|---|---|---|
| Revenue Growth | -2% | Decline due to weaker ad revenue |
| Ad Revenue | -11% | Soft FMCG and macro headwinds |
| Subscription Revenue | +5% | Driven by ZEE5 digital growth |
| EBITDA Margin | Down 808 bps | Higher marketing spends |
Keynote Capital expects gradual recovery in advertising spends led by festive demand and improved macro environment. The brokerage highlights ZEEL’s disciplined cost control, regional content focus, and subscription-led resilience as long-term strengths. At current valuations (~20x FY27E EPS), the stock factors in excessive pessimism, offering an attractive entry point.
Looking to align your media sector portfolio? Track momentum with our BankNifty Intraday Tip.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, believes ZEEL’s near-term margin pressures are transitional. The digital vertical’s sustained growth, cost control, and regional content push provide structural upside. Keynote’s ₹131 target remains reasonable considering advertising normalization in FY26 H2.
Discover more such fundamental and technical insights at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries On Zee Entertainment
- Why did Zee Entertainment’s EBITDA fall in Q2 FY26?
- Can digital streaming offset ad weakness for ZEEL?
- What is Keynote Capital’s outlook on Zee stock?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
